Canaccord Just Downgraded NuVasive And Shares Are Falling

In a report published Wednesday, Canaccord Genuity analysts downgraded the rating on NuVasive, Inc. (NASDAQ: NUVA) from Hold to Buy, while reducing the price target from $54 to $49.

In the report Canaccord Genuity noted, "Given current guidance, a lack of new products near term, tougher comps starting in Q2/15, FX headwinds and the recent turnover in the C-suite, we believe the "beat and raise" story of the past 24 months will become materially more difficult to sustain throughout 2015."

The analysts believe there is limited upside to shares over the next 12 months. The current valuation NuVasive's stock reflects continued top line outperformance and continued margin expansion.

The analysts cited the following reasons for the downgrade:

• Lack of new product cycles in the near term - does not support upside for revenue guidance.
• Recent performance drivers of OUS and biologics are less predictable. Also, there are facing tougher comps starting 2Q15.
• Currency headwinds have increased since the company last announced guidance.
• Operating leverage beyond guidance depends on top-line growth and outperformance. Therefore, there is limited EPS upside in 2015.
• Organization disruption on account of the departure of CFO, COO and CEO within past twelve months.
• Outstanding OIG investigation likely keeps potential acquirers on the sidelines.