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What's in Store for Zimmer Biomet (ZBH) This Earnings Season?
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Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is set to report third-quarter 2018 results on Oct 26, before markets open.
The company delivered an earnings surprise of 2.1% in the last reported quarter. Zimmer Biomet beat the consensus mark in two of the preceding four quarters, the average beat being 0.8%.
Let’s take a look at how things are shaping up prior to this announcement.
Key Catalysts
Zimmer Biomet is again expected to report strong top-line numbers for its S.E.T. (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) arm backed by firm focus on priority areas like quality remediation, supply recovery and product launches.
Management expects the segment to put up a better show in the second half of 2018 as compared to the first half.
The company is receiving consistent positive feedback on the already marketed products. Within Sports, Comprehensive Baseplate, Sidus Stem-Free Shoulder and jogger stitch are expected to see positive response. Within Extremities and Trauma subcategories, the company is investing a lot as well. We are also optimistic about strong customer uptake of the company’s FDA-cleared Comprehensive Augmented Baseplate.
We expect all of these factors to reflect on the company’s third-quarter top line.
Zimmer Biomet Holdings, Inc. Price and EPS Surprise
Meanwhile, the company’s S.E.T business has of late been massively hit by supply issues and persistent pricing pressure.
The Zacks Consensus Estimate for S.E.T. revenues of $413 million reflects an increase of 1.5% from the third quarter of 2017.
We are also upbeat about the Spine, Craniomaxillofacial and Thoracic (Spine & CMF) segment, which is expected to see another promising quarter. At the spine category, Zimmer Biomet should gain from strong uptake of Mobi-C Cervical Disc in the third quarter.
The company’s receipt of 510(k) clearance for its first 3D printed titanium spinal implant — Zyston Strut Open Titanium Interbody Spacer System also buoys optimism. Notably, this is an addition to the company’s comprehensive lumbar spacers portfolio.
The Zacks Consensus Estimate of $186 million for Spine revenues indicates a slight increase from the year-ago quarter’s $185 million.
Other factors likely to influence Zimmer Biomet’s third-quarter results are:
Looking at the focused execution by Zimmer Biomet’s sales teams, we expect the global adoption rate of the flagship personalized knee system — Persona — to be impressive. In April, the company announced the completion of the first surgical case utilizing its Persona Trabecular Metal Tibia, which received an FDA approval in January.
The Zacks Consensus Estimate of $629 million for Knee revenues represents a 0.8% improvement from the prior-year quarter.
Within Hip business, we expect the company to deliver a sturdy performance in the Asia-Pacific region. In the previously reported quarter, the company registered 6.5% sales growth at constant currency exchange rate within Hip in the aforementioned geography. Our consensus estimate for Hip revenues from Asia Pacific is pegged at $94 million, which reflects a 3.3% rise from the year-ago quarter.
The Zacks Consensus Estimate of $439 million for Hip revenues shows a 1.2% rise from the year-ago level.
Emerging markets have always been a significant revenue generating source for Zimmer Biomet. Despite the recent economic downturn in Latin America, the company managed to drive growth through its operations in the other emerging markets, especially the Asia Pacific and EMEA (Europe, the Middle East and Africa) zones.
The consensus estimate for third-quarter revenues from EMEA of $398 million shows a 4.5% gain from the year-earlier quarter. Moreover, the Zacks Consensus Estimate for revenues from the Asia Pacific region is pegged at $297 million, which shows a rise of 0.7% from the year-ago quarter.
On the flip side, Zimmer Biomet grappled with pricing pressure of approximately 2.5% in 2017. In absence of any favorable changes along these lines, the headwinds might reflect on the company’s third-quarter results.
Overall, third-quarter total revenues are projected at $1.84 billion, indicating a rise of 0.9% from the prior-year quarter.
Here’s What Our Quantitative Model Predicts:
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zimmer Biomet has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.47%, a combination that does not hint at an earnings beat.
The Zacks Consensus Estimate for earnings of $1.60 reflects a 7% fall on a year-over-year basis.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat in the to-be-reported quarter.
Thermo Fisher Scientific (TMO - Free Report) carries a Zacks Rank #3 and has an Earnings ESP of +0.48%.
Myriad Genetics (MYGN - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
What's in Store for Zimmer Biomet (ZBH) This Earnings Season?
Zimmer Biomet Holdings, Inc. (ZBH - Free Report) is set to report third-quarter 2018 results on Oct 26, before markets open.
The company delivered an earnings surprise of 2.1% in the last reported quarter. Zimmer Biomet beat the consensus mark in two of the preceding four quarters, the average beat being 0.8%.
Let’s take a look at how things are shaping up prior to this announcement.
Key Catalysts
Zimmer Biomet is again expected to report strong top-line numbers for its S.E.T. (Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) arm backed by firm focus on priority areas like quality remediation, supply recovery and product launches.
Management expects the segment to put up a better show in the second half of 2018 as compared to the first half.
The company is receiving consistent positive feedback on the already marketed products. Within Sports, Comprehensive Baseplate, Sidus Stem-Free Shoulder and jogger stitch are expected to see positive response. Within Extremities and Trauma subcategories, the company is investing a lot as well. We are also optimistic about strong customer uptake of the company’s FDA-cleared Comprehensive Augmented Baseplate.
We expect all of these factors to reflect on the company’s third-quarter top line.
Zimmer Biomet Holdings, Inc. Price and EPS Surprise
Zimmer Biomet Holdings, Inc. Price and EPS Surprise | Zimmer Biomet Holdings, Inc. Quote
Meanwhile, the company’s S.E.T business has of late been massively hit by supply issues and persistent pricing pressure.
The Zacks Consensus Estimate for S.E.T. revenues of $413 million reflects an increase of 1.5% from the third quarter of 2017.
We are also upbeat about the Spine, Craniomaxillofacial and Thoracic (Spine & CMF) segment, which is expected to see another promising quarter. At the spine category, Zimmer Biomet should gain from strong uptake of Mobi-C Cervical Disc in the third quarter.
The company’s receipt of 510(k) clearance for its first 3D printed titanium spinal implant — Zyston Strut Open Titanium Interbody Spacer System also buoys optimism. Notably, this is an addition to the company’s comprehensive lumbar spacers portfolio.
The Zacks Consensus Estimate of $186 million for Spine revenues indicates a slight increase from the year-ago quarter’s $185 million.
Other factors likely to influence Zimmer Biomet’s third-quarter results are:
Looking at the focused execution by Zimmer Biomet’s sales teams, we expect the global adoption rate of the flagship personalized knee system — Persona — to be impressive. In April, the company announced the completion of the first surgical case utilizing its Persona Trabecular Metal Tibia, which received an FDA approval in January.
The Zacks Consensus Estimate of $629 million for Knee revenues represents a 0.8% improvement from the prior-year quarter.
Within Hip business, we expect the company to deliver a sturdy performance in the Asia-Pacific region. In the previously reported quarter, the company registered 6.5% sales growth at constant currency exchange rate within Hip in the aforementioned geography. Our consensus estimate for Hip revenues from Asia Pacific is pegged at $94 million, which reflects a 3.3% rise from the year-ago quarter.
The Zacks Consensus Estimate of $439 million for Hip revenues shows a 1.2% rise from the year-ago level.
Emerging markets have always been a significant revenue generating source for Zimmer Biomet. Despite the recent economic downturn in Latin America, the company managed to drive growth through its operations in the other emerging markets, especially the Asia Pacific and EMEA (Europe, the Middle East and Africa) zones.
The consensus estimate for third-quarter revenues from EMEA of $398 million shows a 4.5% gain from the year-earlier quarter. Moreover, the Zacks Consensus Estimate for revenues from the Asia Pacific region is pegged at $297 million, which shows a rise of 0.7% from the year-ago quarter.
On the flip side, Zimmer Biomet grappled with pricing pressure of approximately 2.5% in 2017. In absence of any favorable changes along these lines, the headwinds might reflect on the company’s third-quarter results.
Overall, third-quarter total revenues are projected at $1.84 billion, indicating a rise of 0.9% from the prior-year quarter.
Here’s What Our Quantitative Model Predicts:
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zimmer Biomet has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.47%, a combination that does not hint at an earnings beat.
The Zacks Consensus Estimate for earnings of $1.60 reflects a 7% fall on a year-over-year basis.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat in the to-be-reported quarter.
Baxter International (BAX - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher Scientific (TMO - Free Report) carries a Zacks Rank #3 and has an Earnings ESP of +0.48%.
Myriad Genetics (MYGN - Free Report) has an Earnings ESP of +2.27% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>