A federal jury in San Diego last week awarded $101.2 million to Medtronic in a patent infringement lawsuit involving spinal implant technology.
The news sent NUVA shares down the chute, from $21.21 before the jury’s decision to a Sept. 21 close of $18.65, a loss of more than 12 percent.
But NUVA shares opened at $20.50 this morning on The Street, up 1.5 percent on the day and more than 14.7 percent above their 52-week nadir of $17.87.
The upswing coincides with a raft of differing views on the company among Wall Street analysts. Analysts at JPMorgan Chase & Co. (NYSE:JPM) cut their price target to $24 Sept. 22, according to LocalizedUSA.com, and researchers at Piper Jaffray (NYSE:PJC) held to their “overweight” rating the next day. Investment bank Barclay’s decided the same day to initiate coverage of NuVasive with an “overweight” rating and a price target of $25. Jefferies lowered its price target to $30 yesterday.
A federal jury in San Diego awarded $101.2 million to Medtronic and $660,000 to its smaller rival Tuesday in a patent infringement lawsuit over spinal implant technology. The news prompted at least one analyst on The Street to lower his earnings estimate for NuVasive’s 2011 and 2012 fiscal years “to account for ongoing MDT royalty accruals.”
“In the near-term, uncertainty around the exact amount of royalties and/or the possibility that MDT will seek an injunction may keep NUVA shares under pressure – at least until a final judgment is issued,” Leerink Swann analyst Rick Wise wrote, noting that it’s only the first phase of a three-stage trial. “However, now that the financial impact of this first, and in our view more significant, phase of the trial has – at least partially – been framed, we think the stock is poised to move higher from currently depressed levels as: (1) we get increased clarity that royalties are not likely to be materially worse than the company’s initial estimates, and (2) investors begin to re-focus on the company’s above-average sales growth potential.”
Wise maintained the investment bank’s “Outperform” rating on the stock, but cut earnings-per-share estimates for 2011 to $1.06, from $1.11, and lowered the 2012 EPS forecast from $1.27 to $1.15.