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, Inc. (NUVA) sank 10% today after the medical device specialist posted a wider-than-expected Q2 loss and said that it received a subpoena from the U.S. Department of Health and Human Services related to a probe of false Medicare and Medicaid claims.
So what: The stock has soared in 2013 on a strong improvement in fundamentals, but today's second-quarter miss -- adjusted EPS of $0.22 versus the consensus of $0.24 -- coupled with the news of a subpoena is forcing Wall Street to bake in some uncertainty into the valuation. Of course, Piper Jaffray analyst Matt Miksic, using history as a guide, wrote in a note to investors that any settlement regarding false claims violations are likely to be manageable, suggesting that today's plunge might be a bit of an overreaction.
Now what: For the full year, management maintained its guidance of $1.00 in adjusted EPS and revenue of about $655 million.
"NuVasive is changing spine surgery with a proven, share taking strategy of Superior Outcomes, Absolute Responsiveness, and Speed of Innovation," said Chairman and CEO Alex Lukianov. "That mission will drive our evolution toward $1 billion in revenue with an improved profitability profile."
More important, with the stock now off 15% from its 52-week highs and trading at a reasonable forward P/E of 20, Mr. Market might finally be offering a window to buy into that bullishness.
