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Globus Medical Hits 52-Week High: What's Driving the Stock?

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Shares of Globus Medical, Inc. (GMED - Free Report) reached a new 52-week high of $57.61 on Dec 9, closing the session marginally lower at $57.34. The stock has rallied 8.1% since its third-quarter earnings announcement on Nov 6.

The company’s third-quarter earnings results, backed by robust segmental and global revenue growth, drove the rally. However, escalating expenses and competitive landscape are headwinds.

Let us discuss.

Q3 Performance

The company exited the third quarter on a mixed note, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. The company witnessed year-over-year revenue improvements in both its segments as well as globally, which bodes well.

 


 

Globus Medical is upbeat about the solid year-over-year improvement in global spine business. The company is also optimistic about maintaining the upside in implant sales with ExcelsiusGPS technology.

Despite rise in the cost of products sold, the company registered gross profit rise on solid top-line performance that buoyed investors’ optimism.

Other Growth Drivers

Product Launches and Development: Market seems to be optimistic about Globus Medical’s latest launch of the AUTOBAHN Nailing System, which is an all-inclusive platform that provides advanced clinical solutions for fractures of the tibia and femur. With this launch, the company aims to foray further into the trauma market.

Further, the company launched a cadence of products that include Autobahn Tibial Nailing, the ANTHEM Tibia Plating System and the ANTHEM Clavicle Plating System. The company has lined up few launches in the upcoming fourth quarter, including the 3D printed interbody spacer and its next generation expandable TLIF device.

Impressive International Growth: The company’s strong international performance in the third quarter 2019 buoyed optimism. Globus Medical believes this uptick to continue in the upcoming quarter owing to access to new technology, pull through from robotic placements and increased investments in peer-to-peer education.

Strong Growth of Spine arm: Investors are upbeat about the company as it continues to witness higher demand for its Musculoskeletal Solutions products. Within this, the domestic spine business captured a significant market share, courtesy of competitive representative recruiting and an implant pull-through from ExcelsiusGPS installations. Contributions from competitive recruiting also aided growth.

Zacks Rank & Key Picks

Currently, Globus Medical carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Haemonetics Corporation (HAE - Free Report) , National Vision Holdings, Inc (EYE - Free Report) and ResMed Inc (RMD - Free Report) .

Haemonetics currently has a Zacks Rank #2 (Buy) and a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Vision’s long-term earnings growth rate is estimated at 17.8%. The company currently carries a Zacks Rank #2.

ResMed’s long-term earnings growth rate is estimated at 12.9%. It currently flaunts a Zacks Rank #1.

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