Sitting Up Straight At NuVasive

Down A Bit From Its Peak
Medical device maker NuVasive (NUVA ) has been outrunning its big rivals. Shares of the tiny maker of minimally invasive surgical tools and implants for treating spine disorders bolted from 12 in March to 20 in late August. It has since dropped to 18, but the drop is a chance to buy, say some pros. Orthopedic makers saw their shares fall because of rumors that price-cutting might be on the way. Prices have yet to decline. Ben Andrew of William Blair, which has done banking for NuVasive and owns shares, notes that industry competition is stiff. Nevertheless, NuVasive is posting strong revenue growth -- close to 70% this year, he says. Trading at 4.5 times his estimated 2006 sales of $93 million, the stock is a compelling investment, says Andrew. He sees NuVasive in the black in 2006, with earnings of 14 cents a share, vs. a 42 cents loss in 2005. Matt Arens of Kopp Investment Advisors, with a 7.5% stake, says NuVasive does well against biggies like Medtronics (MDT ) because of its "innovative products," such as Neodisc, which permits movement in patients soon after undergoing spinal surgery. Ken Lauden of Cottonwood Investments notes that many NuVasive execs are ex-Medtronics officers. He bought shares last year at 10 and sold at 20. "I plan to get back in," he says.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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