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Here's Why You Should Retain Globus Medical (GMED) Stock Now
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Globus Medical, Inc. (GMED - Free Report) is well-poised for growth in the coming quarters, backed by steady progress in its product development engine. For the pending merger with NuVasive, the company received strong support from 99% of its shareholders. The visible rebound in Globus Medical’s revenue trend, following the initial pandemic-led downturn, is encouraging. However, rising expenses and foreign exchange exposure are worrisome.
In the past year, this Zacks Rank #3 (Hold) stock has increased 9.1% compared with the 18.3% rise of the industry and a 17.8% increase of the S&P 500 composite.
The renowned medical device company has a market capitalization of $6.22 billion. Globus Medical projects a long-term estimated earnings growth rate of 12.7% compared with 15.5% of the industry. GMED’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 2.76%.
Let’s delve deeper.
Upsides
Steady Pace of Product Development: In the first quarter, Globus Medical launched the MARS TLIF pedicle-based retractor as part of its focus on procedural efficiency to offer specialized options to meet surgeon preferences. The company also continues to make significant progress in launching its prone lateral patient positioning system.
Image Source: Zacks Investment Research
Across the company’s Trauma business, the AUTOBAHN EVO Femoral Nail systems which were launched in the fourth quarter of 2022, witnessed strong customer uptake in the first quarter. For sustained growth in the long term, GMED remains focused on core elements such as innovative new product introductions and robot and imaging placements. The company’s robotic pipeline remained strong in the United States and internationally.
NuVasive Deal to be Highly Strategic: Per Globus Medical’s management, there has been an overwhelming level of support from the company’s shareholders for the proposed merger with NuVasive, with more than 99% approving the transaction.
Once regulatory approvals are obtained and the transaction closes, Globus Medical expects to deliver above 20% non-GAAP EPS accretion by the completion of the first full year. Post closure, GMED remains steadfast in driving both organic and inorganic growth opportunities along with developing new technologies internally.
Improvement in the Revenue Trend: 2023 marked a strong start for the Globus standalone business, delivering record sales of $277 million (a 21% increase in constant currency). Continued market share gain within the Spine business in the United States, higher sales of enabling technologies' robotic systems, new sales related to the rollout of the E3D imaging system and continued growth within its trauma business contributed to this growth.
The company expects to see increased interest in sales with significant international gains from ExcelsiusGPS in the EMEA and the Asia-Pacific, which will lead to future implant pull-through and strong market share gains.
Downsides
Mounting Expenses: We are worried about escalating expenses putting pressure on the company’s operating margin. SG&A expenses reflected higher personnel-related expenses, primarily driven by sales compensations as well as higher meetings, travel and training expenses. Further, stiff competition and pricing pressure continue to pose challenges.
Exposure to Currency Movements: Globus Medical records 14.8% of its sales from the international market. A significant portion of the company’s foreign revenues and expenses is generated in Japan, the Eurozone, the United Kingdom and Australia. This makes it highly vulnerable to currency fluctuations.
Estimate Trend
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved south from $2.37 to $2.36 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.12 billion. This suggests a 9.7% rise from the year-ago reported number.
Haemonetics currently carries a Zacks Rank #2 (Buy). It has an earnings yield of 4.24% against the industry’s -3.02%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.21%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics’ shares have rallied 32.2% against the industry’s 19.9% decline in the past year.
Zimmer Biomet presently carries a Zacks Rank #2. It has an earnings yield of 5.23% compared to the industry’s -3.02%. Zimmer Biomet shares have rallied 37.6% against the industry’s 19.9% decline over the past year.
ZBH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.38%.
Hologic, carrying a Zacks Rank #2, has an earnings yield of 4.84% compared to the industry’s -6.42%. Shares of HOLX have risen 17.3% compared with the industry’s 18.3% growth over the past year.
Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.32%.
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Here's Why You Should Retain Globus Medical (GMED) Stock Now
Globus Medical, Inc. (GMED - Free Report) is well-poised for growth in the coming quarters, backed by steady progress in its product development engine. For the pending merger with NuVasive, the company received strong support from 99% of its shareholders. The visible rebound in Globus Medical’s revenue trend, following the initial pandemic-led downturn, is encouraging. However, rising expenses and foreign exchange exposure are worrisome.
In the past year, this Zacks Rank #3 (Hold) stock has increased 9.1% compared with the 18.3% rise of the industry and a 17.8% increase of the S&P 500 composite.
The renowned medical device company has a market capitalization of $6.22 billion. Globus Medical projects a long-term estimated earnings growth rate of 12.7% compared with 15.5% of the industry. GMED’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 2.76%.
Let’s delve deeper.
Upsides
Steady Pace of Product Development: In the first quarter, Globus Medical launched the MARS TLIF pedicle-based retractor as part of its focus on procedural efficiency to offer specialized options to meet surgeon preferences. The company also continues to make significant progress in launching its prone lateral patient positioning system.
Image Source: Zacks Investment Research
Across the company’s Trauma business, the AUTOBAHN EVO Femoral Nail systems which were launched in the fourth quarter of 2022, witnessed strong customer uptake in the first quarter. For sustained growth in the long term, GMED remains focused on core elements such as innovative new product introductions and robot and imaging placements. The company’s robotic pipeline remained strong in the United States and internationally.
NuVasive Deal to be Highly Strategic: Per Globus Medical’s management, there has been an overwhelming level of support from the company’s shareholders for the proposed merger with NuVasive, with more than 99% approving the transaction.
Once regulatory approvals are obtained and the transaction closes, Globus Medical expects to deliver above 20% non-GAAP EPS accretion by the completion of the first full year. Post closure, GMED remains steadfast in driving both organic and inorganic growth opportunities along with developing new technologies internally.
Improvement in the Revenue Trend: 2023 marked a strong start for the Globus standalone business, delivering record sales of $277 million (a 21% increase in constant currency). Continued market share gain within the Spine business in the United States, higher sales of enabling technologies' robotic systems, new sales related to the rollout of the E3D imaging system and continued growth within its trauma business contributed to this growth.
The company expects to see increased interest in sales with significant international gains from ExcelsiusGPS in the EMEA and the Asia-Pacific, which will lead to future implant pull-through and strong market share gains.
Downsides
Mounting Expenses: We are worried about escalating expenses putting pressure on the company’s operating margin. SG&A expenses reflected higher personnel-related expenses, primarily driven by sales compensations as well as higher meetings, travel and training expenses. Further, stiff competition and pricing pressure continue to pose challenges.
Exposure to Currency Movements: Globus Medical records 14.8% of its sales from the international market. A significant portion of the company’s foreign revenues and expenses is generated in Japan, the Eurozone, the United Kingdom and Australia. This makes it highly vulnerable to currency fluctuations.
Estimate Trend
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved south from $2.37 to $2.36 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.12 billion. This suggests a 9.7% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Zimmer Biomet (ZBH - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Haemonetics currently carries a Zacks Rank #2 (Buy). It has an earnings yield of 4.24% against the industry’s -3.02%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 12.21%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics’ shares have rallied 32.2% against the industry’s 19.9% decline in the past year.
Zimmer Biomet presently carries a Zacks Rank #2. It has an earnings yield of 5.23% compared to the industry’s -3.02%. Zimmer Biomet shares have rallied 37.6% against the industry’s 19.9% decline over the past year.
ZBH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.38%.
Hologic, carrying a Zacks Rank #2, has an earnings yield of 4.84% compared to the industry’s -6.42%. Shares of HOLX have risen 17.3% compared with the industry’s 18.3% growth over the past year.
Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.32%.