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Zimmer Biomet's (ZBH - Free Report) strategic focus on emerging markets and stabilizing market trends bolster our confidence in this stock. However, factors like macroeconomic uncertainties and competitive pressurecontinue to adversely impact Zimmer Biomet's sales. The stock carries a Zacks Rank #3 (Hold).
The company is witnessing a rebound in its business for the past few quarters despite macroeconomic challenges. Per ZBH, procedure recovery continues successfully, aided by no meaningful impact of COVID-19 or staffing challenges. Accordingly, the company is enjoying a tailwind from increased provider capacity, resulting in a backlog pull-through in the recent quarters.
In the third quarter, U.S. sales rose 6%, with elective procedure volumes recovering. Further, sales growth in the S.E.T. category, together with strong capital sales, improved the overall performance in this region. International sales grew 2.9% year over year. All regions benefited from the continued recovery of elective procedures, backlog recapture, strong commercial execution and new product uptake.
In terms of business category, Global Knees grew 7.3%, driven by the strong execution of the company’s 4-pillars strategy centering on a very strong Persona portfolio, combined with the benefits of the ROSA robotics platform. Further, excluding the unfavorable impacts of tough comps in China and headwinds in Russia, the international Hip business demonstrated growth in the low double digits.
Over the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. The company's strategic investments in these regions over the past several quarters to improve operational and sales performance are yielding results.
While the integration of Biomet is over, the combined company has started to benefit from a strong presence in emerging markets with an extended portfolio that includes upper and lower joints. According to the combined company, this will help develop the extremities and trauma business going forward. Zimmer Biomet expects to establish critical mass in both spine and dental that will position the company to compete effectively and gain a share in these significant markets.
The market opportunity is expected to grow to $66.6 billion by 2025 for orthopedic implants globally. Within emerging markets, we note that strength in the Asia Pacific market has continued to drive strong revenue growth so far. As the COVID-19 severity is over now, banking on a cadence of product launches and strong customer adoptions, Zimmer Biomet is successfully expanding its presence in the emerging market. In the third quarter of 2023, Zimmer Biomet’s international sales grew 2.9%, driven by faster recovery and strength across both developed and emerging markets.
Over the past year, shares of Zimmer Biomet have declined 2.5% compared with the industry’s 8% plunge.
Meanwhile, although Zimmer Biomet is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, the ongoing industry-wide trend of staffing shortages and supply chain-related hazards is denting growth. Deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor costs, freight charges and rising interest rates, have put the dental treatment space (which is highly elective) in a tight spot.
Within the Hip category, headwinds in Russia are disproportionately impacting the outside U.S. business. Further, within the S.E.T. category, Zimmer Biomet is facing challenges in the form of reimbursement headwinds, particularly in the Restorative Therapies business. In addition, the company also noted experiencing acute supply challenges within Sports and Trauma. All these are creating significant pressure on the company’s operating profit. During the last reported third quarter, ZBH witnessed a 3.1% increase in SG&A expenses and a 14.9% rise in R&D expenses.
The presence of a large number of players has made the medical device market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. Zimmer Biomet needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimates for Insulet’s 2023 earnings per share have increased from $1.61 to $1.90 in the past 30 days. Shares of the company have decreased 40.1% in the past year compared with the industry’s decline of 6.3%.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Haemonetics’ stock has risen 2.8% in the past year. Earnings estimates for Haemonetics have increased from $3.82 to $3.86 in 2023 and from $4.07 to $4.11 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.23 to $1.43 in the past 30 days. Shares of the company have fallen 6.8% in the past year compared with the industry’s decline of 6.6%.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Zimmer Biomet's (ZBH) Knee Sales Robust, Macro Woes Hurt
Zimmer Biomet's (ZBH - Free Report) strategic focus on emerging markets and stabilizing market trends bolster our confidence in this stock. However, factors like macroeconomic uncertainties and competitive pressurecontinue to adversely impact Zimmer Biomet's sales. The stock carries a Zacks Rank #3 (Hold).
The company is witnessing a rebound in its business for the past few quarters despite macroeconomic challenges. Per ZBH, procedure recovery continues successfully, aided by no meaningful impact of COVID-19 or staffing challenges. Accordingly, the company is enjoying a tailwind from increased provider capacity, resulting in a backlog pull-through in the recent quarters.
In the third quarter, U.S. sales rose 6%, with elective procedure volumes recovering. Further, sales growth in the S.E.T. category, together with strong capital sales, improved the overall performance in this region. International sales grew 2.9% year over year. All regions benefited from the continued recovery of elective procedures, backlog recapture, strong commercial execution and new product uptake.
In terms of business category, Global Knees grew 7.3%, driven by the strong execution of the company’s 4-pillars strategy centering on a very strong Persona portfolio, combined with the benefits of the ROSA robotics platform. Further, excluding the unfavorable impacts of tough comps in China and headwinds in Russia, the international Hip business demonstrated growth in the low double digits.
Over the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth. The company's strategic investments in these regions over the past several quarters to improve operational and sales performance are yielding results.
Zimmer Biomet Holdings, Inc. Price
Zimmer Biomet Holdings, Inc. price | Zimmer Biomet Holdings, Inc. Quote
While the integration of Biomet is over, the combined company has started to benefit from a strong presence in emerging markets with an extended portfolio that includes upper and lower joints. According to the combined company, this will help develop the extremities and trauma business going forward. Zimmer Biomet expects to establish critical mass in both spine and dental that will position the company to compete effectively and gain a share in these significant markets.
The market opportunity is expected to grow to $66.6 billion by 2025 for orthopedic implants globally. Within emerging markets, we note that strength in the Asia Pacific market has continued to drive strong revenue growth so far. As the COVID-19 severity is over now, banking on a cadence of product launches and strong customer adoptions, Zimmer Biomet is successfully expanding its presence in the emerging market. In the third quarter of 2023, Zimmer Biomet’s international sales grew 2.9%, driven by faster recovery and strength across both developed and emerging markets.
Over the past year, shares of Zimmer Biomet have declined 2.5% compared with the industry’s 8% plunge.
Meanwhile, although Zimmer Biomet is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, the ongoing industry-wide trend of staffing shortages and supply chain-related hazards is denting growth. Deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labor costs, freight charges and rising interest rates, have put the dental treatment space (which is highly elective) in a tight spot.
Within the Hip category, headwinds in Russia are disproportionately impacting the outside U.S. business. Further, within the S.E.T. category, Zimmer Biomet is facing challenges in the form of reimbursement headwinds, particularly in the Restorative Therapies business. In addition, the company also noted experiencing acute supply challenges within Sports and Trauma. All these are creating significant pressure on the company’s operating profit. During the last reported third quarter, ZBH witnessed a 3.1% increase in SG&A expenses and a 14.9% rise in R&D expenses.
The presence of a large number of players has made the medical device market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. Zimmer Biomet needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Key Picks
Some better-ranked stocks in the broader medical space are Insulet (PODD - Free Report) , Haemonetics (HAE - Free Report) and DexCom (DXCM - Free Report) . While Insulet presently sports a Zacks Rank #1 (Strong Buy), Haemonetics and DexCom each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Insulet’s 2023 earnings per share have increased from $1.61 to $1.90 in the past 30 days. Shares of the company have decreased 40.1% in the past year compared with the industry’s decline of 6.3%.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Haemonetics’ stock has risen 2.8% in the past year. Earnings estimates for Haemonetics have increased from $3.82 to $3.86 in 2023 and from $4.07 to $4.11 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.23 to $1.43 in the past 30 days. Shares of the company have fallen 6.8% in the past year compared with the industry’s decline of 6.6%.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.