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Here's Why Investors Should Retain Zimmer Biomet (ZBH) Now
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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is gaining from an ongoing business recovery from the COVID-led pandemic impact. The company has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. However, consistent pricing pressure and rising costs do not bode well.
In the past year, the Zacks Rank #3 (Hold) stock has gained 21.6% compared with a 9.1% rise in the industry and a 4.4% rise in the S&P 500.
The renowned musculoskeletal healthcare company has a market capitalization of $26.76 billion. The company’s long-term projected growth of 7.7% compares with the industry’s growth projection of 13.1%.
Let’s delve deeper.
Factors At Play
Business Recovery Continues: Despite the near-term pressure, Zimmer Biomet is putting efforts into business recovery in 2022. In the third quarter, U.S. sales rose 3.2% on the back of strong elective procedure recovery and commercial execution, especially in Zimmer Biomet’s Knee and Hip businesses. EMEA performed better than expected, driven by procedure recovery in developed markets and continued strength in emerging markets.
Focus on Emerging Markets to Drive Growth: Over the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. The company's strategic investments in these regions over the past several quarters to improve operational and sales performance are yielding results. While the integration of Biomet is over, the combined company has started to get benefitted from a strong presence in emerging markets with an extended portfolio that includes upper and lower joints. According to the combined company, this will help develop the extremities and trauma business going forward. Zimmer Biomet expects to establish critical mass in spine and dental that will position the company to compete effectively and gain share in these significant markets.
Image Source: Zacks Investment Research
Dental and Spine Spin-Off to Bode Well: Zimmer Biomet recently completed its planned spin-off procedure of the dental & spine arm. According to Zimmer Biomet management, this planned spin-off of its Spine and Dental business is part of the company’s third phase of ongoing transformation, which includes changing the complexion of the business through active portfolio management to accelerate growth and drive value creation. As per management, for Zimmer Biomet, the transaction is an important next step in the company’s transition into a more streamlined company with a focus on greater and more optimized resource allocation towards innovation in profitable core businesses and where it sees attractive markets with opportunities to become market leaders.
Downsides
Pricing Pressure Continues to Persist: Pricing continues to remain a major headwind for Zimmer Biomet. During the second-quarter earnings call, the company noted that increasing inflationary pressure would pull through into 2023. The company expects about 50-100 basis points of headwind from inflation in 2023 versus the previous estimate of about 50 basis points.
Competitive Landscape: The presence of many players has made the medical devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. Zimmer Biomet must constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
Zimmer Biomet has been witnessing a positive estimate revision trend for 2022. In the past 30 days, the Zacks Consensus Estimate for its 2022 earnings has moved 0.9% north to $6.84.
The Zacks Consensus Estimate for 2022 revenues is pegged at $6.87 billion, suggesting a 12.3% fall from the 2021 reported number.
Key Picks
A better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% fall in the past year.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. MMSI’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Here's Why Investors Should Retain Zimmer Biomet (ZBH) Now
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is gaining from an ongoing business recovery from the COVID-led pandemic impact. The company has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. However, consistent pricing pressure and rising costs do not bode well.
In the past year, the Zacks Rank #3 (Hold) stock has gained 21.6% compared with a 9.1% rise in the industry and a 4.4% rise in the S&P 500.
The renowned musculoskeletal healthcare company has a market capitalization of $26.76 billion. The company’s long-term projected growth of 7.7% compares with the industry’s growth projection of 13.1%.
Let’s delve deeper.
Factors At Play
Business Recovery Continues: Despite the near-term pressure, Zimmer Biomet is putting efforts into business recovery in 2022. In the third quarter, U.S. sales rose 3.2% on the back of strong elective procedure recovery and commercial execution, especially in Zimmer Biomet’s Knee and Hip businesses. EMEA performed better than expected, driven by procedure recovery in developed markets and continued strength in emerging markets.
Focus on Emerging Markets to Drive Growth: Over the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. The company's strategic investments in these regions over the past several quarters to improve operational and sales performance are yielding results. While the integration of Biomet is over, the combined company has started to get benefitted from a strong presence in emerging markets with an extended portfolio that includes upper and lower joints. According to the combined company, this will help develop the extremities and trauma business going forward. Zimmer Biomet expects to establish critical mass in spine and dental that will position the company to compete effectively and gain share in these significant markets.
Dental and Spine Spin-Off to Bode Well: Zimmer Biomet recently completed its planned spin-off procedure of the dental & spine arm. According to Zimmer Biomet management, this planned spin-off of its Spine and Dental business is part of the company’s third phase of ongoing transformation, which includes changing the complexion of the business through active portfolio management to accelerate growth and drive value creation. As per management, for Zimmer Biomet, the transaction is an important next step in the company’s transition into a more streamlined company with a focus on greater and more optimized resource allocation towards innovation in profitable core businesses and where it sees attractive markets with opportunities to become market leaders.
Downsides
Pricing Pressure Continues to Persist: Pricing continues to remain a major headwind for Zimmer Biomet. During the second-quarter earnings call, the company noted that increasing inflationary pressure would pull through into 2023. The company expects about 50-100 basis points of headwind from inflation in 2023 versus the previous estimate of about 50 basis points.
Competitive Landscape: The presence of many players has made the medical devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. Zimmer Biomet must constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
Zimmer Biomet has been witnessing a positive estimate revision trend for 2022. In the past 30 days, the Zacks Consensus Estimate for its 2022 earnings has moved 0.9% north to $6.84.
The Zacks Consensus Estimate for 2022 revenues is pegged at $6.87 billion, suggesting a 12.3% fall from the 2021 reported number.
Key Picks
A better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, sporting a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% fall in the past year.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. MMSI’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.