Barclays Bullish On NuVasive, Globus Medical, Dislikes LDR Holding

Barclays’ Matthew Taylor expanded the spine coverage to include Globus Medical Inc GMED and LDR Holding Corp LDRH, saying that these were “pure play innovators,” while upgrading the rating for NuVasive, Inc. NUVA.

NuVasive

Analyst Matthew Taylor upgraded the rating for the company from Equal-Weight to Overweight, while raising the price target from $58 to $63.00. The EPS estimates for the current and next fiscal years have been raised from $1.48 to $1.53 and from $1.95 to $1.99, respectively.

Taylor said that NuVasive’s business has been performing well, and could be boosted further by the addition of Ellipse and “the ability to pull through core products (like its Reline posterior fixation technology).” NuVasive’s launched its iGA platform about three quarters back, and this seems to be “an incremental positive” for the company.

NuVasive seems well positioned to generate robust top-line growth and beat its conservative guidance for 2016 and 2017-2018, on the back of the acquisition of its Brazilian distributor, stability outside the US and launch of Attrax, the analyst said. He added, “Over the next few periods we anticipate this better growth to flow through to the OM line as NUVA leverages 1,500 bps in margin opportunities.”

Globus Medical

Taylor initiated coverage of the company with an Equal-Weight rating and a price target of $26. He said that while Globus Medical is likely to continue to leverage efficient product development to generate strong margins and cash flows, investments would weigh on its performance.

The analyst expects investments in trauma and robotics to exert pressure on margins and “take time to bear fruit.” Globus Medical delivered slower-than-expected revenue growth in 1Q16 and may miss medium-term expectations.

LDR Holding

Barclays initiated coverage of the company with an Overweight rating and a price target of $27. Taylor wrote, “We see the publication of data on the 2-level cervical disc replacement (CDR), Mobi-C, as a catalyst for insurance coverage and utilization expansion. Based on better clinical data, our survey results, and physician checks, we expect use of CDR to expand.”

LDR Holding’s Mobi-C disc is the sole product currently cleared for a 2-level indication. “In our view, the durability and superiority of longer-term clinical outcomes in 2-level CDR will be a rising tide that can help shift the market,” the analyst mentioned. Moreover, the company is adding reps, training surgeons and expanding the MiVO portfolio.