NuVasive grabs spinal market share, beats Wall Street expectations and gains 10%

NuVasive CEO Alexis Lukianov

Spinal device specialist NuVasive ($NUVA) said it's third in the spinal device market and is aiming now for second place along with more than $1 billion in annual revenue. Wall Street ate up that news, along with an earnings beat and raised guidance, and chased the stock up 10% in early trading on June 30.

The company had second-quarter EPS of $0.28, beating the consensus estimate of $0.25. Revenue for the quarter was $190.7 million, above the Wall Street expectation of $177.5 million. The company also raised fiscal 2014 guidance to $1.11 EPS from prior guidance of $1.06 and to $745 million, from $725 million.

It attributed stronger-than-expected revenue growth to its lumbar and biologics sales in the U.S., as well as solid international growth.

"According to reported results, we can now claim the #3 spot in the global spine market," said NuVasive Chairman and CEO Alexis Lukianov on the second-quarter earnings call. "I am confident that our mission to improve spine surgery with market-leading innovation will support our drive beyond $1 billion in revenue and toward the #2 position in the spine market."

This puts them behind Medtronic ($MDT) and Johnson & Johnson's ($JNJ) Depuy Synthes group but now ahead of Stryker ($SYK). NuVasive has been successful in chipping away at the position of the two market leaders.

Lukianov noted that NuVasive has about an 8% share of the global spine market, but only 3% of the market globally. It aims to expand its market share by: "First, driving the shift in spine toward minimally invasive or MIS and less invasive surgery. Second, penetrating the traditional or open spine market with innovation that is converting that market toward less invasive surgery. And third, expanding our footprint globally and taking share of underpenetrated markets," Lukianov added. International revenue growth for NuVasive has been 45% year-to-date.

He noted that minimally invasive surgeries represent 30% of the global market in 2014, but said he expects that share to rise to 80% in the next decade. He said that trend should help to expand the spinal device annual market opportunity from $2.2 billion to more than $5 billion.

On the earnings news, Jefferies raised its price target to $48 from $45; shares were trading at about $38.50 in early trading on June 30. NuVasive was already up 10% on the year prior to earnings.

- see the earnings release and transcript

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