NuVasive Inc. Stock Upgraded (NUVA)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- NuVasive (Nasdaq:NUVA) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

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Highlights from the ratings report include:

• NUVA's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 10.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
• NUVASIVE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NUVASIVE INC turned its bottom line around by earning $0.07 versus -$1.74 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.07).
• Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
• The gross profit margin for NUVASIVE INC is currently very high, coming in at 81.10%. Regardless of NUVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NUVA's net profit margin of -1.65% significantly underperformed when compared to the industry average.
• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, NUVASIVE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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NuVasive, Inc., a medical device company, engages in the design, development, and marketing of minimally disruptive surgical products and procedurally integrated solutions for the spine. The company's products focus on applications for spine fusion surgery. The company has a P/E ratio of 285.4, above the S&P 500 P/E ratio of 17.7. NuVasive has a market cap of $879.8 million and is part of the health care sector and health services industry. Shares are up 30.9% year to date as of the close of trading on Monday.

You can view the full NuVasive Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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For more information on NuVasive Inc. click any of the following:

• NuVasive Inc. Stock Price

• NuVasive Inc. Analyst Ratings

• NuVasive Inc. Key Stats & Profile

• NuVasive Inc. Earnings

• NuVasive Inc. Ratio Comparison

• NuVasive Inc. Growth Rates

• NuVasive Inc. Balance Sheet

• NuVasive Inc. Cash Flow

• NuVasive Inc. Income Statement