JMP Securities downgrades Nevro Corp stock as sales fall short By Investing.com

On Wednesday, Nevro Corp (NYSE:NVRO) stock received a downgrade to Market Perform from Market Outperform by JMP Securities following their second-quarter financial report for 2024. The company’s sales fell short of expectations, prompting a revision of their full-year guidance.

Nevro now anticipates a double-digit year-over-year decline in sales for the second half of 2024, along with a significantly larger EBITDA loss at the midpoint of their projections.

Despite recent strategic moves including the launch of new spinal cord stimulation (SCS) indications, the introduction of the HFX iQ platform in early 2023, and the acquisition of Vyrsa SI joint therapy in late 2023, these efforts have not been sufficient to offset the downturn in Nevro’s legacy chronic leg and back pain business. The shortfall is attributed to a combination of overall market volume declines and potential market share losses.

The management team at Nevro has identified several factors contributing to the company’s performance. They cited a general softening of the U.S. SCS market, which has been affected by the adoption of earlier therapeutic interventions.

Additionally, the trialing of new products by larger competitors has had an impact, which Nevro’s management believes to be a temporary setback, albeit one that is expected to persist into 2025.

Nevro’s revised outlook reflects the challenges faced by the company in a competitive and evolving market. The downgrade by JMP Securities indicates a shift in the firm’s expectations for Nevro’s performance, considering the multiple initiatives that were anticipated to drive growth but have yet to deliver the desired financial results.

The update on Nevro’s financial health and market position is critical for investors monitoring the medical technology sector, particularly those interested in companies specializing in pain management solutions.

The revised guidance and analyst downgrade underscore the importance of market adaptability and the potential impact of competition on company performance.

InvestingPro Insights

In light of Nevro Corp’s recent performance and market challenges, InvestingPro data reveals some critical financial metrics that investors should consider. With a market capitalization of $319.17 million, Nevro’s price-to-book ratio stands at 1.15 as of Q1 2024, suggesting that the stock is potentially undervalued compared to its book value. However, the company’s revenue growth has been modest, at 3.83% over the last twelve months leading up to Q1 2024, which may reflect the competitive pressures and market volume declines discussed in the article.

InvestingPro Tips provide additional context to Nevro’s situation. Despite holding more cash than debt, which can be a sign of financial stability, Nevro is quickly burning through cash and is not expected to be profitable this year. Furthermore, three analysts have revised their earnings downwards for the upcoming period, aligning with the concerns raised by JMP Securities’ downgrade. This is complemented by the fact that Nevro’s stock has experienced significant declines over the past week and six months, highlighting investor skepticism in the short term.

For investors seeking a deeper dive into Nevro’s financials and future prospects, InvestingPro offers a comprehensive list of additional tips, with more detailed analysis available at https://www.investing.com/pro/NVRO. These insights could prove invaluable for those considering Nevro as part of their investment portfolio.

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