NuVasive tumbles on weak 3Q revenue estimate

NEW YORK -- Shares of NuVasive Inc. lost about a third of their value Thursday after the spinal device maker said its third-quarter revenue will come up short of its previous estimates.

THE SPARK: After the market closed Wednesday, NuVasive said it expects about $147 million in revenue in the third quarter. The San Diego company previously had said its third-quarter total would be close to the $154.4 million in revenue it reported in the second quarter.

Analysts were expecting $153.6 million in revenue on average, according to FactSet.

THE BIG PICTURE: NuVasive makes devices designed to be used in minimally invasive spinal procedures. The company said its revenue was hurt by increasing discounts from competitors and an increase in coverage delays and denials from health insurers, and by increased customer turnover as more surgeons participated in physician-owned distributorships.

THE ANALYSIS: BMO Capital Markets analyst Joanne Wuensch downgraded the shares to "Underperform" from "Market Perform," saying she is not sure when NuVasive's problems will clear up. Wuensch lowered her price target on the shares to $15 from $23.

Jefferies & Co. analyst Raj Denhoy said the results are bad news for NuVasive and for other spinal device makers, although he kept a "Buy" rating on the stock.

"The shortfall will again call into question both the health of the spine market broadly and NuVasive's ability to navigate the changing dynamic," Denhoy wrote.

SHARE ACTION: NuVasive shares skidded $7.36, or 32.6 percent, to $15.26 in afternoon trading. As of Wednesday's close the shares were up 80 percent in 2012, and the stock peaked at $25.99 in early July _ more than double its price at the end of 2011. Thursday's drop put the shares at their lowest prices in about six months.