Healthcare Stock to watch: Nevro Corp (NYSE: NVRO)

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Nevro Corp (NYSE: NVRO) stock rose over 1% on July 16th, 2018 (as of 10:18 AM GMT-4 ; Source: Google finance).

The stock has been under pressure after the company’s VP of sales has been fired. The surprise departure of a key sales executive could disrupt the company’s short- and long-term growth trajectory. That’s especially true considering that the company just recently won FDA approval for its new Senza II Spinal Cord Stimulation System in the U.S. and Europe. Rolling out a new medical device can be tricky, particularly now that the company has to start a search for a new VP of sales.

NVRO in the first quarter of FY 18 has reported the adjusted loss per share of 59 cents, missing the analysts’ estimates for the adjusted earnings per share of 34 cents. The company had reported the adjusted revenue growth of 35.9 percent to $87.6 million in the first quarter of FY 18, beating the analysts’ estimates for revenue of $88.6 million.

Moreover, NVRO announced that preliminary unaudited second quarter 2018 worldwide revenue is expected to be approximately $96.1 million, compared to $78.0 million in the second quarter of 2017. The preliminary unaudited U.S. revenue for the second quarter of 2018 is expected to be approximately $79.9 million. Preliminary unaudited international revenue for the second quarter of 2018 is expected to be approximately $16.2 million. For the full year 2018, the company expects worldwide revenue to be in the range of $385.0 to $390.0 million. This compares to previous expectations for 2018 worldwide revenue in the range of $400.0 to $410.0 million, as announced in May 2018.

Meanwhile, Morgan Stanley’s David Lewis has downgraded Nevro from Overweight to Equal-weight with a price target lowered from $94 to $88. Initially, the analyst were bullish due to material market share gains, an expansion of the total addressable market through new initiatives and Clinical superiority for the Senza spinal cord stimulation system. However, all three catalysts now has risk. Nevro’s commercial message of boasting clinically superior therapies isn’t doing as much as expected, while competing platforms like Abbott Laboratories Burst and Medtronic PLC’s Intellis have gained market traction. The expectations for expansion into new markets not only hasn’t occurred, but Nevro is stuck in a “near-term catalyst void.” After timeline delays, the candidates are slated to begin enrollment in mid-2019.  The superiority of Nevro’s Senza is expected to face challenges from Saluda’s Evoke system in January 2019 or beforehand, as per Lewis. The Saluda platform can be programmed to automatically adjust stimulation levels to a patient’s preferred level and could be statistically superior to traditional SCS treatments, negatively affecting Nevro’s commercial message

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