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3 Reasons to Hold Zimmer Biomet (ZBH) Stock in Your Portfolio
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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is well-poised for growth in the coming quarters, courtesy of its focus on emerging markets to drive growth. The optimism led by a solid third-quarter 2023 performance and potential in its Dental and Spine spin-off are expected to contribute further. Stiff competition and pricing pressure persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 5.2% against 2.5% growth of the industry and a 24.9% rise of the S&P 500 Composite.
The renowned global medical technology player has a market capitalization of $25.31 billion. The company projects 6.7% growth for the next five years and expects to maintain its strong performance. ZBH’s earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 5.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Dental and Spine Spin-Off to Bode Well: In 2022, Zimmer Biomet spun off its Dental & Spine arm. Per management, the transaction is an important next step in its transition into a more streamlined company with a focus on greater and more optimized resource allocation toward innovation in core businesses that are profitable and where it sees attractive markets with opportunities to become market leaders. This raises our optimism.
Focus on Emerging Markets: Over the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth, buoying our optimism. Its strategic investments in emerging markets over the past several quarters to improve operational and sales performance are yielding results. This will likely aid in developing the extremities and trauma business going forward.
Strong Q3 Results: Zimmer Biomet’s solid third-quarter 2023 results buoy optimism. The company saw strong year-over-year sales growth in each of its geographic segments on a reported basis, as well as at constant exchange rate (CER). The majority of the company’s business segments also registered strong CER growth. Management noted solid execution and increasing traction around innovations in the reported quarter.
Downsides
Pricing Pressure: Pricing continues to remain a major headwind for Zimmer Biomet. The company’s top-line growth in the third quarter of 2023 was partially offset by continued pricing pressure, mostly in the Americas and Europe operating segments. We remain concerned about the pricing scenario as it will be affected by cost containment efforts by governmental healthcare, local hospitals and health systems.
Stiff Competition: The presence of a large number of players has made the medical devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of various key players. Zimmer Biomet needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
Zimmer Biomet is witnessing a flat estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has remained stable at $7.51.
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $1.93 billion, suggesting a 5.7% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 38.2% compared with the industry’s 9.4% rise in the past year.
HealthEquity, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 27.5%. HQY’s earnings surpassed estimates in each of the trailing four quarters, with the average being 16.5%.
HealthEquity has gained 8.2% against the industry’s 6.3% decline over the past year.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings’ shares have rallied 44.9% compared with the industry’s 3.7% rise in the past year.
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3 Reasons to Hold Zimmer Biomet (ZBH) Stock in Your Portfolio
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is well-poised for growth in the coming quarters, courtesy of its focus on emerging markets to drive growth. The optimism led by a solid third-quarter 2023 performance and potential in its Dental and Spine spin-off are expected to contribute further. Stiff competition and pricing pressure persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 5.2% against 2.5% growth of the industry and a 24.9% rise of the S&P 500 Composite.
The renowned global medical technology player has a market capitalization of $25.31 billion. The company projects 6.7% growth for the next five years and expects to maintain its strong performance. ZBH’s earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 5.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Dental and Spine Spin-Off to Bode Well: In 2022, Zimmer Biomet spun off its Dental & Spine arm. Per management, the transaction is an important next step in its transition into a more streamlined company with a focus on greater and more optimized resource allocation toward innovation in core businesses that are profitable and where it sees attractive markets with opportunities to become market leaders. This raises our optimism.
Focus on Emerging Markets: Over the recent past, Zimmer Biomet has been working to strengthen its foothold in emerging markets that provide long-term opportunities for growth, buoying our optimism. Its strategic investments in emerging markets over the past several quarters to improve operational and sales performance are yielding results. This will likely aid in developing the extremities and trauma business going forward.
Strong Q3 Results: Zimmer Biomet’s solid third-quarter 2023 results buoy optimism. The company saw strong year-over-year sales growth in each of its geographic segments on a reported basis, as well as at constant exchange rate (CER). The majority of the company’s business segments also registered strong CER growth. Management noted solid execution and increasing traction around innovations in the reported quarter.
Downsides
Pricing Pressure: Pricing continues to remain a major headwind for Zimmer Biomet. The company’s top-line growth in the third quarter of 2023 was partially offset by continued pricing pressure, mostly in the Americas and Europe operating segments. We remain concerned about the pricing scenario as it will be affected by cost containment efforts by governmental healthcare, local hospitals and health systems.
Stiff Competition: The presence of a large number of players has made the medical devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of various key players. Zimmer Biomet needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
Zimmer Biomet is witnessing a flat estimate revision trend for 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has remained stable at $7.51.
The Zacks Consensus Estimate for the company’s fourth-quarter 2023 revenues is pegged at $1.93 billion, suggesting a 5.7% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 38.2% compared with the industry’s 9.4% rise in the past year.
HealthEquity, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 27.5%. HQY’s earnings surpassed estimates in each of the trailing four quarters, with the average being 16.5%.
HealthEquity has gained 8.2% against the industry’s 6.3% decline over the past year.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings’ shares have rallied 44.9% compared with the industry’s 3.7% rise in the past year.