Goldman Sachs has maintained Neutral rating on NuVasive (NUVA) shares and retained the price target too. The comments come after a judge issued preliminary ruling denying Medtronic's case for an injunction against NuVasive and at the same time denying NuVasive's request for an alternative new trial.
Medtronic filed for an injunction to stop NuVasive from selling the products in question after a court decision on phase 1 of a patent infringement trial between the two companies in September 2011. The judge awarded $101.2 million to Medtronic, while NuVasive was granted $660,000.
The brokerage believes that the tentative ruling is in line with its expectations in view of the probability of Medtronic being awarded an injunction as relatively low given the limited precedent in medical devices. Goldman Sachs thinks that the judge may issue a decision following tomorrow's hearing providing an outcome on the injunction hearing. This will be followed by a final judgment on phase 1 of the trial in March or April.
The final verdict should lend some clarity around the final royalty that NuVasive would have to pay. Currently, the royalty stand at 10 percent on implants, 2 percent on the retractor and 3 percent on the cervical plate. The management has earlier indicated for an increase in royalty rates from current levels. Given the fact that the presiding judge has not shown a track record of making decisions in place of the jury, the current rates are in line with historical standards.
After the final judgment, the appellate process will begin in Washington DC and is expected to take about a year to resolve.