Dj Holder Jayanathan Ranjan Registers 38557 Of Radnet Inc >Rdnt

Cardinal Health CAH recently announced that it has entered into definitive agreements to acquire two companies. These agreements are likely to accelerate Cardinal Health's strategic growth areas along with enhancing patient care.

CAH is likely to acquire a majority stake in GI Alliance (“GIA”), along with acquiring the Advanced Diabetes Supply Group (“ADSG”). GIA is the country's leading gastroenterology management services organization (“MSO”), from a combination of GIA physician owners and funds managed by affiliates of Apollo. ADSG is one of the country's leading diabetic medical supplies providers.

Likely Trend of CAH Stock Following the News

Following the announcement, shares of the company moved nearly 1.5% north to $123.51 at yesterday’s closing. In the year-to-date period, CAH’s shares have gained 22.5% compared with the industry’s 5.8% growth. The S&P 500 has increased 26.3% in the same time frame.

Meanwhile, CAH currently has a market capitalization of $29.44 billion. It has an earnings yield of 6.36%, higher than the industry’s yield of 5.28%. In the last reported quarter, CAH delivered an earnings surprise of 14.63%.

Integer Holdings ITGR witnessed strong momentum year to date. Shares of the company have gained 40.8% compared with the 6.7% rise of the industry in the same time frame. The S&P 500 Composite has risen 26.1% during the same period.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.

Plano, TX-based Integer Holdings manufactures and develops medical devices and components primarily for original equipment manufacturers.

In November, ITGR announced the completion of the previously announced sale of its Electrochem business to Ultralife Corporation for $50 million in cash. Following the divestiture transaction, Integer Holdings is now completely a medical technology company with additional cash to pay down debt and execute its inorganic growth strategy.

Factors Favoring ITGR’s Growth

Integer Holdings is witnessing an upward trend in its stock price, prompted by its execution of manufacturing excellence initiatives, an improved supply chain, and a complete focus on the medical segment following the divestiture. The optimism led by a solid third-quarter 2024 performance and its strength in Medical sales are expected to contribute further.

Investors seemed optimistic about Integer Holdings’ recent facility expansions. In September, ITGR announced the completion of its facility expansions in Ireland. This announcement followed the official opening of an 80,000 sq. ft. expansion of Integer Holdings guidewire manufacturing facility in New Ross, County Wexford, Ireland, earlier in September. This expansion in Ireland provides ITGR with the capacity and differentiated capabilities to amplify its customers’ innovation and help the company bring products to market faster. Accordingly, investors seemed to be optimistic following this news.

Integer Holdings exited the third quarter of 2024 with impressive results. The strong year-over-year top-line and bottom-line performances were impressive. Robust performances by the Medical segment and strength in all the product lines of the Medical segment were encouraging. These factors must have aided in surging the stock’s price.

Integer Holdings generated a gross profit of $116.6 million in the third quarter, up 11% year over year. The gross margin in the third quarter expanded 56 basis points (bps) to 27%. Adjusted operating profit totaled $75.6 million in the third quarter, reflecting a 17.1% uptick from the prior-year quarter. Adjusted operating margin in the third quarter expanded 125 bps to 17.5%. The expansion of both margins bodes well for the stock and has contributed to raising the price of the stock.

Factors That May Offset the Gains for ITGR

Sales of Integer Holdings’ products into the energy market depend upon the condition of the oil and gas industry. Currently, oil and natural gas prices have been subject to significant fluctuation. As a result, the oil and gas exploration and production business is affected by various political and economic factors. Per management, a change in the oil and gas exploration and production industry or a reduction in the exploration and production expenditures of oil and gas companies could cause the company’s energy market revenues to decline.

A Look at Estimates

Integer Holdings’earnings per share (EPS) in 2024 and 2025 are expected to grow 14.1% and 13.3% to $5.33 and $6.04 on a year-over-year basis, respectively. The Zacks Consensus Estimate for EPS has increased 3 cents for 2024 and decreased 2 cents for 2025 in the past 30 days.

Revenues for 2024 and 2025 are anticipated to rise 8.3% and 6.9% to $1.73 billion and $1.85 billion, respectively, on a year-over-year basis.

Stocks to Consider

Some better-ranked stocks in the broader medical space are AngioDynamics ANGO, Quest Diagnostics DGX and RadNet RDNT. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.

Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Quest Diagnostics’ shares have risen 42% year to date compared with the industry's 14.9% growth.

RadNet’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 98.2%.

RDNT’s shares have soared 93.7% year to date compared with the industry’s 14.8% growth.

Zacks Investment Research

Nevro Corp. NVRO reported a loss per share of 41 cents in the third quarter of 2024, narrower than the year-ago quarter’s loss of 65 cents. The Zacks Consensus Estimate is pegged at a loss per share of 82 cents.

Revenues in Detail

Nevro registered worldwide revenues of $96.9 million in the third quarter, down 6.7% year over year on a reported basis and 7% on a constant-currency basis. The year-over-year decline was primarily due to competitive pressures in the U.S. spinal cord stimulation (SCS) market and ongoing softness in the core U.S. SCS market. However, the figure topped the Zacks Consensus Estimate by 4.1%.

Quarterly Highlights

In the quarter under review, international revenues were $13 million, down 7.7% year over year on a reported basis and 9.6% at a constant exchange rate (CER). The year-over-year decline was primarily due to the short-term impact of negative SCS-related media reports in Australia, which resulted in the postponement and cancelation of cases, as well as the impact of healthcare reform in Germany, which caused a delay in procedures in the third quarter of 2024.

U.S. revenues for the quarter totaled $83.9 million, down 6.5% year over year.

Total U.S. permanent implant procedures declined 9.6% year over year, while U.S. trial procedures decreased 15.2% year over year. The year-over-year decrease in U.S. trials was primarily driven by competitive pressures and ongoing softness in the core U.S. SCS market during the quarter.

During the third quarter, Nevro announced the FDA approval and limited market release of HFX iQ AdaptivAI, a responsive, personalized pain management platform powering the HFX iQ SCS system. The company anticipates a full market release of HFX AdaptivAI in the United States in the fourth quarter of 2024.

Nevro also received regulatory approval to sell its HFX iQ system in CE-marked countries in the European Union. It expects to begin the limited market release in select regions of Europe in the fourth quarter of 2024 with the full market release planned for the first quarter of 2025.

During the reported quarter, Nevro’s comparative biomechanical data on Nevro1 was accepted for publication in Medical Devices: Evidence and Research. Nevro1 was found to provide equivalent and superior motion reduction, respectively, with a less invasive and less destructive approach while providing the largest surface area for fusion compared to other commercial SI joint transfixing devices.

Nevro Corp. Price, Consensus and EPS Surprise

Nevro Corp. price-consensus-eps-surprise-chart | Nevro Corp. Quote

Margin Trend

In the quarter under review, Nevro’s gross profit declined 7.1% year over year to $64.6 million. The gross margin in the third quarter of 2024 was 66.7% compared with 66.9% in the prior-year quarter.

Sales, general & administrative expenses decreased 15.6% year over year to $68.5 million. Research and development expenses decreased 24% year over year to $10.6 million. Operating expenses for the third quarter of 2024 were $78.5 million ($83.5 million excluding restructuring charges, intangible amortization, contingent consideration revaluations, and a year-over-year reduction in litigation-related expenses) compared with $95.1 million in the prior-year quarter.

The total operating loss in the reported quarter was $13.9 million ($18.9 million excluding restructuring charges, intangible amortization, contingent consideration revaluations, and year-over-year decrease in litigation-related expenses) compared with $25.6 million in the year-ago quarter.

Financial Position

Nevro exited the third quarter of 2024 with cash and cash equivalents and short-term investments of $277 million compared with $273.7 million at the end of the second quarter. Long-term debt at the end of third-quarter 2024 was $184.4 million compared with $180.6 million at the second-quarter end.

Guidance

Nevro has maintained its outlook for full-year 2024.

The company continues to expect its 2024 worldwide revenues in the range of $400 million-$405 million. The company's revised guidance assumes that U.S. SCS trialing growth rates are not likely to improve from the third quarter of 2024.

Per management, the guidance considers the impact of market challenges that NVRO is facing and reduced direct-to-consumer marketing spend from earlier this year. The guidance also includes some effect in the fourth quarter from the two hurricanes that hit the Southeast, causing a shortage in IV bags and, thus, a delay in procedures. The Zacks Consensus Estimate is pegged at $402.2 million.

Our Take

Nevro exited the third quarter of 2024 with better-than-expected results, with earnings and revenues beating their respective Zacks Consensus Estimate. Shares were up 14.5% during after-market trading. However, the stock plunged 75.3% year to date against the industry’s 6.7% growth and the S&P 500’s 26.1% increase.

Meanwhile, the company’s third-quarter revenues are affected by ongoing softness in the U.S. SCS market and competitive pressures. Total U.S. permanent implant procedures, as well as U.S. trial procedures, declined in the third quarter. However, NVRO is likely to witness growth opportunities in an underpenetrated SCS market with the launches of HFX AdaptivAI in the United States and HFX iQ in the EU. Also, the company’s diversification into the SI joint fusion is likely to generate additional revenues.

The gross margin is likely to face challenges during the second half of fiscal 2024 due to the accounting of inventory variances and overhead that occurred in 2023 as NVRO transitions from contract manufacturing to manufacturing in-house. Thus, NVRO expects a lower gross margin in the fourth quarter compared with the first half of this year. NVRO also expects lower production volumes from decreased sales in 2024 to continue to create certain margin headwinds next year as well.

However, NVRO continues to make progress in shifting additional work to the Costa Rica manufacturing facility to further leverage its investment there and continue on the path toward achieving a long-term gross margin in the mid-70% range and driving toward profitability.

Zacks Rank and Key Picks

Nevro currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are AngioDynamics ANGO, Quest Diagnostics DGX and RadNet RDNT. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.

Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Quest Diagnostics’ shares have risen 42% year to date compared with the industry's 14.9% growth.

RadNet’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 98.2%.

RDNT’s shares have soared 93.7% year to date compared with the industry’s 14.8% growth.

Zacks Investment Research

The S&P 500 Index Monday closed up +0.10%, the Dow Jones Industrials Index closed up +0.69%, and the Nasdaq 100 Index closed down -0.05%.

Stocks on Monday settled mixed, with the S&P 500 and the Dow Jones Industrials posting new all-time highs. The broader market extended last week’s post-election gains on speculation President-elect Trump will boost corporate profits through tax cuts and reduced regulation. Also, Tesla rallied more than +8%, adding to last week’s +26% surge on speculation that the company would benefit from a Trump presidency. In addition, cryptocurrency-related stocks soared Monday on speculation digital assets will benefit from the Trump administration’s pro-crypto policies. Trading activity in equities was below average on Monday, with the cash treasury market closed for the Veterans' Day holiday.

On the negative side, chipmakers retreated Monday to drag the Nasdaq 100 Stock Index lower. Also, Minneapolis Fed President Kashkari said a strong US economy and higher productivity growth could lead policymakers to reduce interest rates less than expected over the coming months.

The price of Bitcoin Monday closed down by -12 ticks. The 10-year T-note yield did not trade Monday with the cash Treasury market closed for the Veteran’s Day holiday. Hawkish comments from Minneapolis Fed President Kashkari weighed on T-notes when he said a strong US economy and higher productivity growth could lead policymakers to reduce interest rates less than expected over the coming months. Also, Monday’s rally in the S&P 500 to a new record high reduces safe-haven demand for T-notes and is undercutting T-note prices.

European government bond yields on Monday moved lower. The 10-year German bund yield fell to a 1-1/2 week low of 2.311% and finished down -4.1 bp to 2.327%. The 10-year UK gilt yield dropped to a 1-week low of 4.407% and finished down -1.0 bp to 4.425%.

ECB Governing Council member Holzmann said he sees "no reason" for the ECB not to cut interest rates at its December policy meeting, but a cut is not guaranteed.

ECB Governing Council member Stournaras said, "Now that inflation is coming down, we've started to lower interest rates, which looks like we're going to continue lower and could end up close to 2% around next September."

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 18% for a -50 bp rate cut at the same meeting.

US Stock Movers

Bristol Myers Squibb closed up more than +10% to lead gainers in the S&P 500 after rival AbbVie sank when it said its two mid-stage trials of its investigative treatment for adults with schizophrenia missed their primary endpoints, which may boost demand for BMY’s Cobenfy drug for the mental disorder.

Tesla closed up more than +8% at a 2-1/2 year high to lead gainers in the Nasdaq 100. Tesla is adding to last week’s +26% surge on expectations that the incoming Trump administration will support the company. Also, Wedbush raised its price target on the stock to $400 from $300 and said, “A Trump White House will be a game-changer for the autonomous and AI story for Tesla and Musk over the coming years.”

Cryptocurrency-linked stocks rallied sharply Monday, with the price of Bitcoin surging more than +14% to a new record high. As a result, Coinbase Global , Bit Digital , MicroStrategy , MARA Holdings , and Riot Platforms closed up more than +17%.

Cigna Group closed up more than +7% after confirming it is not pursuing a combination with Humana and is expecting to reaffirm projected 2024 adjusted income from operations of at least $28.40 a share and adjusted EPS growth of at least 10% in 2025.

Salesforce closed up more than +6% to lead gainers in the Dow Jones Industrials after CEO Benioff said the company will hire 1,000 workers to capitalize on the “amazing momentum” for the company’s AI product.

RadNet closed up more than +20% after reporting Q3 revenue of $461.1 million, better than the consensus of $441.5 million, and announced a collaboration with GE HealthCare on the adoption of AI imaging.

Winnebago Industries closed up more than +6% after Northcoast Research upgraded the stock to buy from neutral with a price target of $75.

Fortinet closed up more than +5% after HSBC upgraded the stock to buy from hold with a price target of $111.

Chip stocks retreated Monday to weigh on the Nasdaq 100. Intel and Microchip Technology closed down more than -4%. Also, KLA Corp , ARM Holdings Plc , and NXP Semiconductors NV closed down more than -3%. In addition, Lam Research , Micron Technology , GlobalFoundries , Analog Devices , and Broadcom closed down more than -2%.

Monolithic Power Systems closed down more than -14% to lead losers in the S&P 500 after Edgewater said the company’s Blackwell allocation is at risk.

Abbvie closed down more than -12% after saying its two mid-stage trials of its investigative treatment for adults with schizophrenia missed their primary endpoints.

Celanese closed down more than -7% after BMO Capital Markets downgraded the stock to underperform from market perform with a price target of $76.

Newmont Corp closed down more than -6% to lead miners lower after the price of gold dropped more than -2% Monday to a 1-month low.

Monday.com closed down more than -15% after reporting an unexpected Q3 EPS loss of -24 cents versus expectations of a +1-cent gain.

Sapiens International NV closed down more than -26% after reporting Q3 adjusted revenue of $137.0 million, weaker than the consensus of $140.2 million.

Revvity closed down more than -1% after Nephron Research downgraded the stock to sell from hold with a price target of $105.

Earnings Reports (11/12/2024)

Amdocs Ltd (DOX), Archer-Daniels-Midland Co (ADM), Azenta Inc (AZTA), Cava Group Inc (CAVA), GRAIL Inc (GRAL), Home Depot Inc/The (HD), Light & Wonder Inc (LNW), Maplebear Inc (CART), Mosaic Co/The (MOS), Natera Inc (NTRA), Occidental Petroleum Corp (OXY), Repligen Corp (RGEN), Rocket Cos Inc (RKT), Roivant Sciences Ltd (ROIV), Shift4 Payments Inc (FOUR), Skyworks Solutions Inc (SWKS), Spotify Technology SA (SPOT), Tyson Foods Inc (TSN), ZoomInfo Technologies Inc (ZI).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.