Yahoo Finance Is Nevro Corp. (NYSE:NVRO) Potentially Undervalued?
Nevro Corp. (NYSE:NVRO), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Nevro’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for Nevro
What's the opportunity in Nevro?
According to my valuation model, Nevro seems to be fairly priced at around 5.86% above my intrinsic value, which means if you buy Nevro today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $129.70, there’s only an insignificant downside when the price falls to its real value. Furthermore, Nevro’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Nevro?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Nevro’s earnings over the next few years are expected to increase by 33%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? NVRO’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on NVRO, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Nevro at this point in time. In terms of investment risks, we've identified 2 warning signs with Nevro, and understanding these should be part of your investment process.
If you are no longer interested in Nevro, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.