Writing on NuVasive (NUVA) three months ago
I said, “Given the history here of the market swinging too far during
both the bad times and the good times, I'd be careful buying near the
highs, but I'd certainly reconsider if the sector sells off on another
bout of health insurance reform uncertainty and/or a company-specific
shortfall in earnings/guidance.”
One of those big swings has
occurred, with the shares down a quarter since then. The decline hasn't
come without some reasons, including a slower U.S. spine market,
executive departures, and a subpoena from the OIG, but these don't
strike me as long-term issues. Instead, they remind me of a lot of the
other short-term setbacks that have created interruptions in NuVasive's
long-term run. To that end, I believe strong revenue growth and margin
leverage are still in play here, and I believe the shares are actually
undervalued.
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A Window Has Opened For NuVasive
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