Globus Medical, Inc. (GMED Quick QuoteGMED - Free Report) is well-poised for growth in the coming quarters, backed by above-market growth in the U.S. spine business, increasing momentum internationally and the strong performance of trauma.  The company witnessed significant progress while integrating the NuVasive merger.

Meanwhile, forex woes and competitive disadvantages are a concern for GMED’s operations.  

In the past year, this Zacks Rank #3 (Hold) stock has gained 12.1% compared with the 14% growth of the industry and a 14.7% rise of the S&P 500 composite.

The renowned medical device company has a market capitalization of $7.49 billion. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.04%.

Let’s delve deeper.

Upsides

Musculoskeletal Prospects Strong: The company is seeing notable gains across its product portfolio in expandables, biologics, MIS screws, 3D printed implants and cervical offerings. In the past couple of quarters, this business registered above-market growth driven by competitive rep recruiting from prior quarters and robotic pull-through.

In the fourth quarter, Legacy Globus's musculoskeletal revenues increased 11.8%. The upside was led by the company’s U.S. and international spine businesses and continued share growth within trauma.

NuVasive Merger, a Strategic One:  Globus Medical merged its business with NuVasive.  The combined company is working to bring the best-in-class technologies to create a differentiated and comprehensive procedural solution offering as part of its approach to address unmet clinical needs and support surgeons and patients.

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In terms of the latest development, NuVasive standalone sales for the fourth quarter were up 2% on a pro-forma basis, primarily driven by continued market penetration in the international spine with market re-entry of key technology of NuVasive Specialty Orthopedics and strengthen NuVasive Clinical Services.

Prominent Trend Improvement: Following the initial pandemic-led downturn of the Globus Medical business, there has been a visible rebound in the company’s revenue trend that continued with a steady climb upward. Since the beginning of 2023, continued market share gain within the U.S. Spine, higher sales of Enabling Technologies' robotic systems, new sales related to the rollout of the Excelsius3D imaging system and continued growth within its trauma business contributed to this upside. In the fourth quarter, Enabling Technologies sales remained strong, with 2.1% growth on record units placed.

Downsides

Competitive Landscape: The presence of a large number of players made the musculoskeletal devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of more prominent players like Zimmer Biomet, Stryker, Johnson & Johnson’s DePuy, Smith & Nephew and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.

Exposure to Currency Movement: In 2023, Globus Medical generated 18.4% 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 U.K. and Australia.  This makes it highly vulnerable to currency fluctuations. For full-year 2022, the company reported a foreign currency transaction loss of $1.02 million.

Estimate Trend

The Zacks Consensus Estimate for GMED’s 2024 earnings per share (EPS) has moved up from $2.64 to $2.69 in the past 60 days.

The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.47 billion, suggesting a 57.2% surge from the year-ago reported number.

Key Picks

Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK Quick QuoteSYK - Free Report) , Cencora, Inc. (COR Quick QuoteCOR - Free Report) and Cardinal Health (CAH Quick QuoteCAH - Free Report) .

Stryker, carrying a Zacks Rank #2, reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.

Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.

COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.

Cardinal Health, carrying a Zacks Rank #1, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion increased 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.

CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.