NuVasive Upgraded To Buy At Canaccord On Leverage

• NuVasive, Inc NUVA shares are up 46 percent in the last one year, rising to their 52-week high of $56.61 on August 4.
• Canaccord Genuity’s William J. Plovanic upgraded the rating on the company from Hold to Buy, while raising the price target from $52 to $58.
• The company’s new management is focusing on operational improvements and is expected to drive continued operating leverage, Plovanic mentioned.

Analyst William Plovanic said that NuVasive’s management had undergone a significant transition over the past 12-18 months. Although this transition had raised concerns over the company’s day-to-day operations, execution in the past nine months has boosted confidence in the management’s ability to deal with any potential issues, Plavanic added.

The analyst believes that NuVasive’s new management is yet to implement some new initiatives aimed at operational improvement. The company is now targeting operating margins of more than 20 percent on revenues of $1 billion.

During its 1Q15 earnings call, NuVasive outlined a long-term strategy comprising of the commercialization of its integrated Global Alignment [iGA] platform. The platform will include “computer-assisted surgical planning tools, neuro- monitoring, and a complete offering of implants, which should improve outcomes,” the Canaccord Genuity report stated.

Plavanic believes that a strong US macro-economic scenario for the broad spine market will offset tough comps faced the company and will “continue to provide a solid tailwind.”