- Spine device maker NuVasive forecast a compound annual growth rate of between 5% and 7% and a revenue target of $1.6 billion by 2024 at its investor day presentation on Thursday, a target Wall Street analysts called realistic, but not conservative.
- The company said it expects growth to come from expansion into overseas markets and increased adoption of its minimally invasive spine technologies.
- It was NuVasive's first investor day under new CEO J. Chris Barry, who succeeded Gregory Lucier in the position in November. Barry joined the company from Medtronic, where he was president of the Surgical Innovations business.
Achieving revenue growth in the mid-single digits in a flat market could be a challenge, some analysts said.
The spinal implant market has struggled with slow growth for years as insurers have taken a hard line on reimbursing for procedures and favor of more conservative treatments. Analysts at UBS are forecasting 1% to 2% growth for the spine device market in the next few years.
UBS has a sell rating on shares of NuVasive due to the tough market and pricing pressure. "Long term guidance is realistic but we would not call it conservative as it depends on growth from navigation and robotics and strong execution OUS," the analysts wrote in a research note following the investor day presentation.
NuVasive is looking to accelerate its growth by rolling out new technologies. The company is currently releasing its its X360 lateral surgery system, meant to shorten procedure times, and introduced the Pulse integrated technology platform in July. Pulse combines neuromonitoring, surgical planning, rod bending, radiation reduction, imaging and navigation functions.
The company has said it plans to unveil the Pulse robotic application at a spine industry meeting in September.
Jefferies analysts, in a research note, projected overall U.S. spine market in the range of flat to 2%, hampered by mid-single-digit pricing pressure and intense competition. "Being able to grow 4-5 (times) the market rate seems optimistic," the analysts wrote, noting the company has a 15% U.S. market share.
RBC Capital Markets analysts said NuVasive's plans to drive worldwide share gains through product introductions such as X360, Pulse, new cervical systems for anterior and posterior fixation, new complex deformity solutions and proprietary surface technologies were in line with its expectations.
In the second quarter, NuVasive reported a 3.7% increase in revenue as volume growth increased, driven by the X360 system.