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Is a Beat in Store for Zimmer Biomet (ZBH) in Q2 Earnings?

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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is set to report second-quarter 2021 results on Aug 3, before market open.

In the last reported quarter, the company’s earnings of $1.71 beat the Zacks Consensus Estimate by 13.3%. Over the trailing four quarters, its earnings outperformed the consensus estimate on all occasions, the average beat being 48.75%.

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

Factors at Play

Since the beginning of 2021, Zimmer Biomet has been witnessing strong recovery of its legacy business. This has been driven by expanded vaccination drive and fall in COVID-19 cases, which have led people to once again opt for non-COVID elective orthopedic and musculoskeletal procedures. The company’s Q2 top-line result is expected to reflect this procedure volume improvement.

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 second quarter. We expect this arm to deliver better results in the to-be-reported quarter on the back of the company’s focus on sports and extremities, especially upper extremities, trauma and CMFT (Craniomaxillofacial Trauma). Zimmer Biomet is likely to have gained from its increasing presence in the field of Ambulatory Surgery Centers. Also, strong surgeon registrations of the Signature One surgical planning system for shoulder procedures are likely ti have driven growth in Q2.

Within the Dental and Spine business, irrespective of COVID-19’s impact, Zimmer Biomet has been witnessing growth deceleration in the recent quarters, mainly due to unfavorable pricing. However, over the past few months, the segment has been witnessing business recovery on the back of strong commercial execution, new product launches, including robotics, and overall market recovery. This momentum is likely to have continued during the second quarter as well, primarily banking on ongoing strong recovery in Dental along with expected robust contributions from implants and digital solutions in dental business. Further, wider market adoption of robotics and contributions coming from Mobi-C and Tether within Spine are likely to have also contributed to the growth.

We expect the company to have witnessed strength in its performances within its Hips and Knees product portfolio 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-induced hurdles, robust performance of Avenir Complete is likely to have continued during the second quarter as well, thus driving the Hip business. Also, strong demand for ROSA Knee, along with strong momentum for Persona Revision, is likely to have continued through the to-be-reported quarter.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $1.98 billion, suggesting a 61.4% surge over the year-ago reported figure.

The Zacks Consensus Estimate for the company’s second-quarter 2021 earnings per share of $1.84 indicates an increase from the year-ago adjusted earnings of 5 cents a share.

What Our Model Suggests

Our proven model predicts an earnings beat for Zimmer Biomet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) increases the chances of an earnings beat. This is exactly the case as you can see below.

Earnings ESP: Zimmer Biomet has an Earnings ESP of +2.58%. 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.

Other Stocks Worth a Look

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

Globus Medical, Inc. (GMED - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank of 2. The company is slated to release its second-quarter 2021 results on Aug 4.  You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed Inc. (RMD - Free Report) has an Earnings ESP of +2.40% and a Zacks Rank of 2, at present. The company is slated to release its fourth-quarter fiscal 2021 results on Aug 5.

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +0.91% and is a Zacks #2 Ranked stock. The company is slated to release its second-quarter 2021 results on Aug 3.