NUVA's 3Q results continue to demonstrate the revenue growth potential of the Company's product portfolio. Additionally, Management added color on 2008 sales growth potential of +35% y-o-y. While excellent news, I am inclined to agree with Lehman Brothers view that this number could prove conservative given the continued focus on expanding the sales force and the expected return from this investment to the revenue line. With this kind of growth story, a valuation premium to other medical device stocks is justified and should continue to support the valuation.
Given how far the stock has come in such a short period, I would not be surprised to see profit taking in the coming weeks, especially after the expected Fed cut on 10/31. Further near-term weakness could be driven by systemic issues that could set the market back in coming weeks. I would look for opportunistic entry points on any dips in the price between now and year-end, building a position into the 4Q07 earnings announcement. This stock has had a monster 2007 and could be a great Overweight opportunity in what looks to be a challenging 2008 from a broad market perspective.
$43.42 (10/30/07)
