I've liked NuVasive (NASDAQ:NUVA) for some time now, and the company's share price performance (up 12% from my last article in March, and up 48% since this article in the summer of 2014)
has given me no cause for regrets. While the company has seen plenty of
turmoil, including major departures of "C-suite" executives, the basic
plan of driving increased market share, increased overseas sales, and
better margins seems very much intact.
I continue to believe that
NuVasive has a strong future. Minimally invasive procedures should
continue to gain share within the large spinal procedure market, and I
see little evidence that NUVA is losing its edge in terms of innovation
and product development. The company does have the significant challenge
of striking the right balance between growth-supportive spending and
improved margins, but I think it has a credible plan to achieve both.
M&A remains a big wildcard, both in terms of who/what NuVasive may
buy and who may try to buy NuVasive.
A relative outperformer in a
tough market, NuVasive doesn't leap out to me as a cheap stock today,
but then again high-quality med-tech growth seldom sells cheaply. A
mid-$50s fair value still looks reasonable on an EV/revenue basis, but
the volatility of these shares may argue for a wider-than-average margin
of safety for new buyers.
Read more here:
After Some Turbulence, NuVasive Appears To Be On A Better Flightpath
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