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Zimmer Biomet (ZBH) to Report Q4 Earnings: What's in Store?

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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is set to report fourth-quarter 2020 results on Feb 5, before market open.

In the last-reported quarter, the company’s earnings of $1.81 beat the Zacks Consensus Estimate by 72.4%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average beat being 50.85%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Following an encouraging third quarter where non-elective healthcare procedures were on the rebound, fourth-quarter results are expected to reflect robust performance by Zimmer Biomet on gradual reopening of the economy. The new patient volume and backlog of patients that had deferred treatment during the pandemic are expected to significantly contribute to the fourth-quarter revenues. Further, the company is also optimistic about maintaining its growth momentum in the fourth quarter as well after a faster-than-expected recovery in business over the past few months. However, the company had been witnessing patient fear arising out of the continued surge of the virus, especially in Europe, Middle East, Africa and the United States, along with adverse impacts on policy decisions in certain areas over the past few months. Although the company has been somewhat successful in mitigating this fear via campaigns, increasing case of infections along with the recent emergence of the new strain of coronavirus looms large on the company’s top line in the to-be-reported quarter.

The S.E.T. business (comprising Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma), the company’s major focus area, is expected to have put up a sequentially better performance in the fourth quarter amid the mayhem. These procedures, being less elective by nature, are expected to have been less impacted in the fourth quarter. The increasing adoption of the company’s Signature ONE Planner shoulder system over the past few months buoys optimism regarding the fourth-quarter results. Further, the buyout of RELINE is likely to have strengthened Zimmer Biomet’s comprehensive sports medicine portfolio with the addition of a complete and innovative arthroscopy tower option. This is expected to have boosted the company’s top line in the fourth-quarter results.

Zimmer Biomet Holdings, Inc. Price and EPS Surprise


Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. price-eps-surprise | Zimmer Biomet Holdings, Inc. Quote

Within the Dental, Spine & CMFT (Craniomaxillofacial and Thoracic) business, even if we don’t consider the COVID-19 impact, Zimmer Biomet has been witnessing growth deceleration in recent quarters, mainly due to unfavorable pricing. However, over the past few months, the segment has been witnessing robust performances on the back of strong execution, new products including robotics and market recovery. This momentum is likely to have continued during the fourth quarter as well, thus driving up the top line.

We expect the company to have witnessed strength in its performances within its Hips and Knees product portfolios in the United States, which is better equipped for pandemic support compared to the non-U.S. markets of Zimmer Biomet. The nature of the business, which is non-elective, might have continued with sequential improvement in elective procedure trends. Despite COVID-19 hurdles, robust performance of Avenir Complete is likely to have continued during the fourth quarter as well, thus driving up the Hip business in the quarter under review. Also, the strong demand for ROSA along with strong momentum for Persona Revision are likely to have continued through the to-be-reported quarter.

Zimmer Biomet has rallied 12.2% compared with the industry’s 6.7% growth and the S&P 500's 11.6% rise between the period from October to December 2020 despite challenges posed by the pandemic.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter 2020 revenues is pegged at $2.09 billion, suggesting a decline of 1.7% from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s fourth-quarter 2020 earnings per share of $2.07 suggests a 10% fall from the year-ago reported figure.

What Our Quantitative Model Predicts

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Zimmer Biomet has an Earnings ESP of -4.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

Option Care Health, Inc. (OPCH - Free Report) has an Earnings ESP of +34.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Patterson Companies, Inc. (PDCO - Free Report) has an Earnings ESP of +1.96% and a Zacks Rank of 2, at present.

DENTSPLY SIRONA Inc. (XRAY - Free Report) has an Earnings ESP of +4.45% and is a Zacks #2 Ranked stock.

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