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Globus Medical (GMED) Hurt by Dull Global Growth, Low Margins
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On Apr 7, we issued an updated research report on Globus Medical, Inc. (GMED - Free Report) . The company continues to witness higher demand for its Musculoskeletal Solutions products. Meanwhile, it is expanding its footprint in the overseas markets by consolidating direct and distributors’ sales force.
Over the past six months, shares of Globus Medical have outperformed its industry. The stock has gained 19.2% compared with 0.2% growth of the industry.
Globus Medical exited the fourth quarter of 2020 with better-than-expected earnings. Robust top-line growth along with improvements in the company’s U.S. revenues led by the U.S. spine and Enabling Technologies businesses looks encouraging. Musculoskeletal Solutions products rose 8.9% year over year. Enabling Technologies product revenues in the quarter reflected a 30% uptick from the prior-year figure.
Competitive recruiting and onboarding, product launches and implant pull-through from robotics continued to be strong contributors to growth. Expansion of adjusted operating margin looks encouraging. Steady pace of product development, strong solvency position and potential in international business, along with a robust domestic spine arm, are added positives.
On the flip side,lower-than-expected revenues in the quarter are concerning. International performance was comparatively sluggish due to mixed performances across all nations.
Pricing continues to remain a major headwind for Globus Medical. Throughout 2019 and till the third quarter of 2020, the company’s top-line growth was partially dampened by continued pricing pressure. We remain concerned about the pricing scenario as it will be affected by cost containment efforts by governmental healthcare, local hospitals and health systems.
Further, the company has been facing serious margin pressure over the past few quarters. Gross margin in the reported quarter contracted a huge 303 basis points (bps) on a 24.8% rise in cost of goods sold in the last-reported fourth quarter.
Zacks Rank & Key Picks
Currently, Globus Medical carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Hologic, Inc. (HOLX - Free Report) , Hill-Rom Holdings, Inc. and DENTSPLY SIRONA Inc. (XRAY - Free Report) .
Hill-Rom’s long-term earnings growth rate is estimated at 7.3%. It currently carries a Zacks Rank #2.
DENTSPLY’s long-term earnings growth rate is estimated at 20%. The company presently carries a Zacks Rank #2.
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Globus Medical (GMED) Hurt by Dull Global Growth, Low Margins
On Apr 7, we issued an updated research report on Globus Medical, Inc. (GMED - Free Report) . The company continues to witness higher demand for its Musculoskeletal Solutions products. Meanwhile, it is expanding its footprint in the overseas markets by consolidating direct and distributors’ sales force.
Over the past six months, shares of Globus Medical have outperformed its industry. The stock has gained 19.2% compared with 0.2% growth of the industry.
Globus Medical exited the fourth quarter of 2020 with better-than-expected earnings. Robust top-line growth along with improvements in the company’s U.S. revenues led by the U.S. spine and Enabling Technologies businesses looks encouraging. Musculoskeletal Solutions products rose 8.9% year over year. Enabling Technologies product revenues in the quarter reflected a 30% uptick from the prior-year figure.
Competitive recruiting and onboarding, product launches and implant pull-through from robotics continued to be strong contributors to growth. Expansion of adjusted operating margin looks encouraging. Steady pace of product development, strong solvency position and potential in international business, along with a robust domestic spine arm, are added positives.
On the flip side,lower-than-expected revenues in the quarter are concerning. International performance was comparatively sluggish due to mixed performances across all nations.
Globus Medical, Inc. Price
Globus Medical, Inc. price | Globus Medical, Inc. Quote
Pricing continues to remain a major headwind for Globus Medical. Throughout 2019 and till the third quarter of 2020, the company’s top-line growth was partially dampened by continued pricing pressure. We remain concerned about the pricing scenario as it will be affected by cost containment efforts by governmental healthcare, local hospitals and health systems.
Further, the company has been facing serious margin pressure over the past few quarters. Gross margin in the reported quarter contracted a huge 303 basis points (bps) on a 24.8% rise in cost of goods sold in the last-reported fourth quarter.
Zacks Rank & Key Picks
Currently, Globus Medical carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Hologic, Inc. (HOLX - Free Report) , Hill-Rom Holdings, Inc. and DENTSPLY SIRONA Inc. (XRAY - Free Report) .
Hologic’s long-term earnings growth rate is estimated at 15.4%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hill-Rom’s long-term earnings growth rate is estimated at 7.3%. It currently carries a Zacks Rank #2.
DENTSPLY’s long-term earnings growth rate is estimated at 20%. The company presently carries a Zacks Rank #2.
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If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
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