When a med-tech stock, particularly an established one, seems to be undervalued on the basis of both its cash flow and growth, it’s wise to reconsider your assumptions. While NuVasive (NUVA) enjoyed a honeymoon period after Chris Barry was brought on as CEO, the company has been smacked by COVID-19, and delays with the Pulse platform and better relative performance at rivals like Globus (GMED) have led to questions about whether the company can still drive meaningful share growth and margin leverage.
NuVasive has been a tough stock to recommend in the past, as it seems to always find a way to snatch defeat from the jaws of victory, and the shares have been a long-term laggard in the med-tech space. While I’m worried about blundering into a value trap, I believe there are still real opportunities in product platforms like X360, Cohere, Coalesce, and Modulus, and I believe that Pulse, whenever it finally reaches the market can drive some incremental growth. With the shares looking undervalued below the low-to-mid $60’s, I think this is a risk worth taking for investors who don’t want to chase pricier names that have already run.
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NuVasive's Valuation Prices In An Excessively Bearish Outlook
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