Why NuVasive Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NuVasive (NAS: NUVA) rallied as much as 20% earlier in the trading session after the medical equipment manufacturer reported better-than-expected first-quarter results.

So what: For the quarter, NuVasive reported a 22% rise in revenue to $151.9 million and an adjusted profit of $0.20. This compares to Wall Street's expectations for an adjusted profit of $0.18 on $143.5 million in sales. NuVasive also reaffirmed its previous revenue and EPS full-year guidance. If there was one negative to report, the company's gross margin fell to 75.7% from 81.1% a year earlier as expenses rose.

Now what: NuVasive's management team seemed pretty pleased with the company's market-share taking results thus far, but I would be more concerned with the falling margins. Although the company kept its full-year forecast unchanged, I'm still not sold on NuVasive at 19 times forward earnings -- especially with costs rising.

Craving more input? Start by adding NuVasive to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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