Don't Be Shaken By NuVasive's (NUVA) Conservative Guidance - Piper Jaffray

Piper Jaffray analyst, Matt O'Brien, noted that NUVA reported Q1 results that beat on the top and bottom lines but only modestly raised revenue guidance and kept EPS the same. The analyst chalks this up to management conservatism however and raises the PT to $58 (from $50 - on rising estimates and a larger multiple) while maintaining his Overweight rating.

Sales of $215.1M (up 12% cc) were driven by the company’s U.S. hardware business, which beat estimates by approximately $8M as continued interest in iGA and several new implants led the charge. EPS of $0.31 beat expectations as the operating margin leverage story continues to play out.

After beating specific Q1 revenue guidance by $10M and despite the sales benefit it will likely enjoy from the acquisition of its Brazilian distributor (probably a couple million dollars), NUVA only raised its full year 2016 topline guidance by $5M, which may cause some investor consternation (potentially some fearing that there is something fundamental hidden in the business). However, the analyst believes its guidance is simply a continuation of the recent pattern of conservatism this management team has elected to pursue when issuing guidance.

The new PT of $58 is based on a 3.5x EV/Sales multiple up from 3.0x.

For an analyst ratings summary and ratings history on NuVasive click here. For more ratings news on NuVasive click here.

Shares of NuVasive closed at $51.66 yesterday.

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