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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 the recent NuVasive merger, which brings a comprehensive offering of musculoskeletal procedural solutions and enabling technologies to impact the care continuum.
Across the musculoskeletal space, the company is particularly seeing notable gains across its product portfolio in expandables, biologics, MIS screws, 3D-printed implants and cervical offerings. A strong solvency also bodes well for the stock.
Meanwhile, macroeconomic headwinds and competitive disadvantages remain concerns for GMED’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has declined 24.5% against the 1.4% growth of the industry and the 20.9% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $7.79 billion. Globus Medical has an earnings yield of 4.69% against the -5.38% of the industry. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.44%.
Let’s delve deeper.
Upsides
NuVasive, A Strategic Merger: In September 2023, Globus Medical completed the earlier-announced merger with NuVasive. Capitalizing on GMED’s complementary commercial organization, the combined company is expected to create a global musculoskeletal company focused on rapid innovation, addressing unmet clinical needs and improving offerings to surgeons and patients.
Together, they expect to bring the best-in-class technologies to create a differentiated and comprehensive procedural solution offering as part of their approach to address unmet clinical needs and support surgeons and patients. The operational footprints will allow them to better leverage each other's manufacturing and supply chain resources to increase internal production while reducing the amount of capital investment required as stand-alone companies.
Image Source: Zacks Investment Research
The combined company expects to outpace market growth and gain share while maintaining financial discipline to drive sales growth. Also, it intends to continue with mid-30s EBITDA, accelerate EPS growth and increase cash flows for investors.
Strong Musculoskeletal Prospects: Globus Medical is gaining market share in the musculoskeletal solutions space, banking on the strong performance of its implantable devices, biologics, accessories and unique surgical instruments used in an expansive range of spinal, orthopedic and neurosurgical procedures.
Over the past couple of quarters, this business has registered above-market growth driven by competitive rep recruiting from prior quarters and robotic pull-through. Earlier, Globus Medical launched three new products, REFLECT, MARVEL and Ossifuse. The company continues to make significant progress in launching its prone, lateral patient positioning system. Globus Medical anticipates a strong cadence of product launches throughout the Musculoskeletal portfolio in 2024 as well.
Strong Liquidity: Globus Medical exited the third quarter of 2023 with cash and cash equivalents and short-term marketable securities of $468.9 million compared with $612.8 million at the end of the second quarter. The company finished the quarter with no debt in its balance sheet.
Downsides
Macroeconomic Concerns Curb Profit: Like other industry players, Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. In the third quarter, the company incurred a 139.6% surge in the cost of goods sold.
These macroeconomic factors, along with the rising wage and raw material costs, are also leading to a significant escalation in the company’s operating expenses. SG&A expenses in the reported quarter were up 46.6% from the year-ago quarter. Research and development expenses increased 56.8% year over year.
Competitive Landscape: The presence of many players made the musculoskeletal devices market intensely competitive. The orthopedic industry is highly competitive, with the presence of more prominent players like Zimmer Biomet, Johnson & Johnson’s DePuy and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.
Estimate Trend
The Zacks Consensus Estimate for GMED’s 2023 earnings per share (EPS) has remained constant at $2.31 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.56 billion, suggesting a staggering 52.2% rise from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 6.5% compared with the industry’s 6.5% fall in the past year.
DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 17.3% compared with the industry’s 11.3%. Shares of the company have increased 35.3% compared with the industry’s 8.8% growth over the past year.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 27.5% compared with the industry’s 13.9%. Shares of HQY have increased 31.2% against the industry’s 6% decline over the past year.
HQY’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.
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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 the recent NuVasive merger, which brings a comprehensive offering of musculoskeletal procedural solutions and enabling technologies to impact the care continuum.
Across the musculoskeletal space, the company is particularly seeing notable gains across its product portfolio in expandables, biologics, MIS screws, 3D-printed implants and cervical offerings. A strong solvency also bodes well for the stock.
Meanwhile, macroeconomic headwinds and competitive disadvantages remain concerns for GMED’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has declined 24.5% against the 1.4% growth of the industry and the 20.9% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $7.79 billion. Globus Medical has an earnings yield of 4.69% against the -5.38% of the industry. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.44%.
Let’s delve deeper.
Upsides
NuVasive, A Strategic Merger: In September 2023, Globus Medical completed the earlier-announced merger with NuVasive. Capitalizing on GMED’s complementary commercial organization, the combined company is expected to create a global musculoskeletal company focused on rapid innovation, addressing unmet clinical needs and improving offerings to surgeons and patients.
Together, they expect to bring the best-in-class technologies to create a differentiated and comprehensive procedural solution offering as part of their approach to address unmet clinical needs and support surgeons and patients. The operational footprints will allow them to better leverage each other's manufacturing and supply chain resources to increase internal production while reducing the amount of capital investment required as stand-alone companies.
Image Source: Zacks Investment Research
The combined company expects to outpace market growth and gain share while maintaining financial discipline to drive sales growth. Also, it intends to continue with mid-30s EBITDA, accelerate EPS growth and increase cash flows for investors.
Strong Musculoskeletal Prospects: Globus Medical is gaining market share in the musculoskeletal solutions space, banking on the strong performance of its implantable devices, biologics, accessories and unique surgical instruments used in an expansive range of spinal, orthopedic and neurosurgical procedures.
Over the past couple of quarters, this business has registered above-market growth driven by competitive rep recruiting from prior quarters and robotic pull-through. Earlier, Globus Medical launched three new products, REFLECT, MARVEL and Ossifuse. The company continues to make significant progress in launching its prone, lateral patient positioning system. Globus Medical anticipates a strong cadence of product launches throughout the Musculoskeletal portfolio in 2024 as well.
Strong Liquidity: Globus Medical exited the third quarter of 2023 with cash and cash equivalents and short-term marketable securities of $468.9 million compared with $612.8 million at the end of the second quarter. The company finished the quarter with no debt in its balance sheet.
Downsides
Macroeconomic Concerns Curb Profit: Like other industry players, Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. In the third quarter, the company incurred a 139.6% surge in the cost of goods sold.
These macroeconomic factors, along with the rising wage and raw material costs, are also leading to a significant escalation in the company’s operating expenses. SG&A expenses in the reported quarter were up 46.6% from the year-ago quarter. Research and development expenses increased 56.8% year over year.
Competitive Landscape: The presence of many players made the musculoskeletal devices market intensely competitive. The orthopedic industry is highly competitive, with the presence of more prominent players like Zimmer Biomet, Johnson & Johnson’s DePuy and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.
Estimate Trend
The Zacks Consensus Estimate for GMED’s 2023 earnings per share (EPS) has remained constant at $2.31 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.56 billion, suggesting a staggering 52.2% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , DaVita (DVA - Free Report) and HealthEquity (HQY - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.3%. HAE’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 6.5% compared with the industry’s 6.5% fall in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 17.3% compared with the industry’s 11.3%. Shares of the company have increased 35.3% compared with the industry’s 8.8% growth over the past year.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 27.5% compared with the industry’s 13.9%. Shares of HQY have increased 31.2% against the industry’s 6% decline over the past year.
HQY’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.