NUVA 4Q Upside Encouraging But Visibility Remains Poor, J.P. Morgan Reports

NuVasive, Inc. NUVA reported full 4Q results Wednesday after the close that were roughly in line with the company's earlier preannouncement, “with revenues of $129.3M (+20.9%) coming in $6.0M above our estimate,” J.P. Morgan reports. “On the bottom line, adjusted EPS of $0.46 was $0.04 above our forecast, driven largely by strong gross margin and well-contained SG&A spending,” J.P. Morgan writes. “While the 4Q upside is encouraging, visibility on Nuvasive's sustainable topline growth rate remains poor. The company's fourth quarter revenue included $2M in royalties related to its legal settlement with Orthofix and another $2M from capital sales. However, even if we exclude this, it still leaves roughly $2M of upside from better procedure volume. “While this was off admittedly reduced expectations, it suggests that recent pressure on the lumbar segment of Nuvasive's business may be stabilizing. The question going forward is to what extent the market can improve as we move through 2011, something that we believe may take some time to become clear.” NuVasive closed Wednesday at $28.57.