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Here's Why You Should Retain Zimmer Biomet (ZBH) for Now
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Zimmer Biomet (ZBH - Free Report) is well-poised for growth in the coming quarters due to the innovation momentum seen with new product launches and strong execution across the entire organization. The key pillars of focus in the Knee and Hip business are poised to drive pricing stability, mix benefits and competitive conversions. An updated financial outlook for 2023 also buoys optimism.
Meanwhile, global supply-chain pressures are hurting Zimmer Biomet’s business performance. The company also faces intense competition from its peers in the industry.
In the past year, this Zacks Rank #3 (Hold) stock has increased 12.2% against the 0.9% fall of the industry and the 12.2% rise of the S&P 500 composite.
The leading musculoskeletal healthcare company has a market capitalization of $24.56 billion. The company has an earnings yield of 6.39% against the industry’s -1.89%. Zimmer Biomet surpassed estimates in three of the trailing four quarters and was breakeven in one, delivering an average earnings surprise of 4.47%.
Let’s delve deeper.
Tailwinds
A Solid Q2 Performance: Zimmer Biomet’s last reported second-quarter performance benefited from the continued procedure recovery, significant traction with new product innovations and the team’s solid execution. The strong performance of the Knee business was driven by the four pillars of focus, centered on a very attractive Persona portfolio, combined with the benefits of the ROSA robotic platform.
Image Source: Zacks Investment Research
The company has nearly 40 planned product launches between 2023 and 2025, which are expected to drive near-term growth. A revised outlook for the full-year 2023 induces management’s confidence to grow the company’s top line above market rates.
Innovative Hip Portfolio Holds Potential: ZBH has a strong portfolio with ROSA and Hip Insight, which are technology shifts in robotics and mixed reality that are setting up greater adoption and growth of the franchise. Zimmer Biomet’s current flagship product, Avenir Complete primary hip, combined with G7, puts the company in a firm position in the attractive direct anterior and revision submarkets of hip.
Management expects an enhanced position, with work being done on a triple taper stem, which will fully round out its direct interior approach portfolio. In addition, the company is set for the upcoming full launch of HAMR, an automated impaction system that creates surgical efficiencies while bringing personalized precision to every patient.
Meaningful Pillars Within the Knee Franchise: The business is seeing continued global traction with the powerful combination of the ROSA robotic platform and Persona cementless knee. The Persona Revision provides a meaningful conversion and mix opportunities inside the revision category. It also acts as a powerful tip-of-the-spear product for conversions and primary needs.
The overall shift of ZBH’s legacy knee systems to the fully rounded out Persona portfolio is a meaningful mix benefit, which the company is likely to take advantage of. Further, Persona IQ, the world’s first and only smart knee implant, offers surgeons unparalleled data access despite being in a limited launch. The company cites this as an attractive option for patients who want more direct engagement with their care recovery.
Downsides
Macroeconomic Challenges Persist: Zimmer Biomet’s operations are exposed to the supply-constrained environment, inflationary pressure, a tough labor market and geopolitical landscape and staffing shortage. Reimbursement headwinds within the restorative therapies business are another downside. Within Sports and Trauma, the company faced acute supply challenges in the second quarter of 2023.
A Competitive Landscape: The medical device market is intensely competitive. The orthopedic industry, in particular, is comprised of players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. ZBH needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
The Zacks Consensus Estimate for Zimmer Biomet’s 2023 earnings per share (EPS) has moved up from $7.46 to $7.51 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $7.40 billion. This suggests a 6.7% rise from the year-ago reported number.
Haemonetics has an earnings yield of 4.29% against the industry’s -2%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 19.4% against the industry’s 0.3% decline in the past year.
SiBone, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.2%. Shares of the company have rallied 32.9% against the industry’s 3.5% decline over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 16.3%. Shares of QTRX have risen 171.5% against the industry’s 0.9% decline over the past year.
Quanterix’s earnings surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
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Here's Why You Should Retain Zimmer Biomet (ZBH) for Now
Zimmer Biomet (ZBH - Free Report) is well-poised for growth in the coming quarters due to the innovation momentum seen with new product launches and strong execution across the entire organization. The key pillars of focus in the Knee and Hip business are poised to drive pricing stability, mix benefits and competitive conversions. An updated financial outlook for 2023 also buoys optimism.
Meanwhile, global supply-chain pressures are hurting Zimmer Biomet’s business performance. The company also faces intense competition from its peers in the industry.
In the past year, this Zacks Rank #3 (Hold) stock has increased 12.2% against the 0.9% fall of the industry and the 12.2% rise of the S&P 500 composite.
The leading musculoskeletal healthcare company has a market capitalization of $24.56 billion. The company has an earnings yield of 6.39% against the industry’s -1.89%. Zimmer Biomet surpassed estimates in three of the trailing four quarters and was breakeven in one, delivering an average earnings surprise of 4.47%.
Let’s delve deeper.
Tailwinds
A Solid Q2 Performance: Zimmer Biomet’s last reported second-quarter performance benefited from the continued procedure recovery, significant traction with new product innovations and the team’s solid execution. The strong performance of the Knee business was driven by the four pillars of focus, centered on a very attractive Persona portfolio, combined with the benefits of the ROSA robotic platform.
Image Source: Zacks Investment Research
The company has nearly 40 planned product launches between 2023 and 2025, which are expected to drive near-term growth. A revised outlook for the full-year 2023 induces management’s confidence to grow the company’s top line above market rates.
Innovative Hip Portfolio Holds Potential: ZBH has a strong portfolio with ROSA and Hip Insight, which are technology shifts in robotics and mixed reality that are setting up greater adoption and growth of the franchise. Zimmer Biomet’s current flagship product, Avenir Complete primary hip, combined with G7, puts the company in a firm position in the attractive direct anterior and revision submarkets of hip.
Management expects an enhanced position, with work being done on a triple taper stem, which will fully round out its direct interior approach portfolio. In addition, the company is set for the upcoming full launch of HAMR, an automated impaction system that creates surgical efficiencies while bringing personalized precision to every patient.
Meaningful Pillars Within the Knee Franchise: The business is seeing continued global traction with the powerful combination of the ROSA robotic platform and Persona cementless knee. The Persona Revision provides a meaningful conversion and mix opportunities inside the revision category. It also acts as a powerful tip-of-the-spear product for conversions and primary needs.
The overall shift of ZBH’s legacy knee systems to the fully rounded out Persona portfolio is a meaningful mix benefit, which the company is likely to take advantage of. Further, Persona IQ, the world’s first and only smart knee implant, offers surgeons unparalleled data access despite being in a limited launch. The company cites this as an attractive option for patients who want more direct engagement with their care recovery.
Downsides
Macroeconomic Challenges Persist: Zimmer Biomet’s operations are exposed to the supply-constrained environment, inflationary pressure, a tough labor market and geopolitical landscape and staffing shortage. Reimbursement headwinds within the restorative therapies business are another downside. Within Sports and Trauma, the company faced acute supply challenges in the second quarter of 2023.
A Competitive Landscape: The medical device market is intensely competitive. The orthopedic industry, in particular, is comprised of players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. ZBH needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
The Zacks Consensus Estimate for Zimmer Biomet’s 2023 earnings per share (EPS) has moved up from $7.46 to $7.51 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $7.40 billion. This suggests a 6.7% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , SiBone (SIBN - Free Report) and Quanterix (QTRX - Free Report) .
Haemonetics has an earnings yield of 4.29% against the industry’s -2%. Haemonetics’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have risen 19.4% against the industry’s 0.3% decline in the past year.
HAE sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
SiBone, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 22.9% compared with the industry’s 16.2%. Shares of the company have rallied 32.9% against the industry’s 3.5% decline over the past year.
SIBN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.37%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 16.3%. Shares of QTRX have risen 171.5% against the industry’s 0.9% decline over the past year.
Quanterix’s earnings surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.