
NuVasive Inc. (NSDQ:NUVA) CEO Alex Lukianov is aiming to take the #3 spot in the spinal implant market and has set his sights on the $1 billion sales mark, after NuVasive’s 1st-quarter results showed it taking market share from its larger rivals.
That seems to be music to Wall Street’s ears, as investors bid shares up more than 23% yesterday and analysts issued a slew of upgrades for the San Diego-based company.
NuVasive posted profits of $673,000, or 2¢
per diluted share, on sales of $151.7 million during the 3 months ended March 31. Excluding 1-time items, net income was $8.8 million, or 20¢ per adjusted share – a penny above the consensus view on The Street.
Lukianov told analysts on a conference call that the company is balancing its market-taking strategy with the need to develop its product pipeline, aiming to move from #5 to #3 on the list of the largest spinal implant makers and ramp revenues to $1 billion "over the next several years."
"The piece that’s not being talked about very often is that the larger companies are losing share to the smaller companies," Lukianov said. "There’s a fair amount of churn taking place in the spine industry right now, among the 25% to 35% of market share that’s owned by the smaller companies" like Medtronic (NYSE:MDT), Stryker (NYSE:SYK), Synthes Inc. and Zimmer (NYSE:ZMH).
NuVasive re-affirmed its full-year guidance, saying it expects to post $615 million in sales during 2012 and adjusted EPS of 93¢, a penny below estimates on The Street.
The Q1 results sent NUVA shares up 23.1% to a $20.39 close yesterday. NuVasive shares had gained another 3.3% as of about 12:320 p.m. today, reaching $21.06 apiece.
Analysts also liked the numbers. Robert W. Baird & Co.
raised its rating "outperform" from "neutral" and boosted its price target from $18 to $24, while William Blair raised its rating to "outperform" from "market perform." Canaccord Genuity upped its PT to $27 from $21 and re-iterated its "buy" rating.
Lukianov said NuVasive plans to set $113 million aside to cover a possible loss of its appeal on its patent infringement loss to Medtronic.
Last September a California jury awarded the med-tech titan $101 million after deciding that NuVasive wilfully infringed a patent for lateral spinal surgery.
"The appellate process has formally begun and we are eager for justice to be done," he said during the conference call, noting that the patent in question is set to expire in February 2015.
The Medtronic litigation took about 1.9% from operating margins, CFO Michael Lambert said during the call, adding that NuVasive’s $80 million acquisition of Impulse Monitoring bit off another 3.0%.