NVRO Earnings Flop Brings On The Bear Notes

The medical device firm reported first-quarter earnings and revenue that fell well below analysts' expectations

A first-quarter revenue miss has medical device concern Nevro Corp (NYSE:NRVO) trading lower today. The shares are down 5% at $59.67 in early trading, after reporting a 6% revenue drop to $82.1 million versus analysts' estimated $87.5 million. The firm cited a decision earlier this year to reduce the impact of high-volume product orders for the drop, while it also suspended its full-year forecast following the appointment of its new CEO. NVRO also posted a wider-than-expected loss of $1.45 per share, too.

Analysts are already responding to NVRO's first-quarter flop in droves. Morgan Stanley slashed its target price to $64 from $70, while Leernik cut its estimate to $70 from $75. Canaccord Genuity got in on the action too, with a downgrade to "hold" from "buy," and a price-target cut to $50 -- the lowest estimate on the books. Nevro is susceptible to even more downgrades, though, with seven "strong buy" ratings, two "holds," and only one "strong sell" prior to today.

A massive bull gap in late-March had NVRO up 61.4% at last night's close, with the $60 level stepping up as support. The 50-day moving average also could be supportive, currently sitting around the $57 level.

Short sellers are likely celebrating today, with short interest up 7.8% in the last two reporting periods. The 3.47 million shares sold short now represent a whopping 11.8% of the stock's available float, and would take over seven days to cover, at NVRO's average trading volume.