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Zimmer Biomet (ZBH) Procedure Recovery Aids Amid Macro Woes
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Zimmer Biomet (ZBH - Free Report) is witnessing volume improvement within Knee and Hip businesses. However, macroeconomic issues impede growth. The stock carries a Zacks Rank #3 (Hold) currently.
Zimmer Biomet has witnessed a rebound in its business in the past few quarters despite macroeconomic challenges. According to the company, procedure recovery continues, aided by no meaningful impact from staffing challenges. Accordingly, the company is enjoying a tailwind from increased provider capacity, resulting in backlog pull-through in the recent quarters.
Despite a sizable day rate headwind and difficult year-over-year comps in the first quarter, U.S. sales rose 3.7% year over year. Since the beginning of 2024, procedure volume has been very strong in both Knees and Hips, banking on an improved market scenario. International sales grew 5.4% year over year at a constant exchange rate. All regions benefited primarily from continued growth in the Knee category as well as strong commercial execution and new product uptake.
Global Knees growth was driven by the strong execution of the company’s four-pillar strategy, backed by a solid Persona portfolio and benefits of the ROSA robotics platform. Within Hips, where it lost market share in the last two years, the company expects to accelerate performance in 2024 with the addition of multiple new product offerings, one being the Z1 hip stem in the direct anterior hip category, which recently received an FDA nod.
Further, sales growth in the S.E.T. category ( with double-digit growth in the areas of CMFT, upper extremities and sports), together with strong capital sales, improved the overall performance. In 2024 and beyond, Zimmer Biomet expects the S.E.T. business to continue to grow in mid-single-digits or above, banking on new innovations and product launches. Going by our model, S.E.T. business revenues are likely to witness a CAGR of 5.1% through 2026. The company’s Hips business is expected to witness a 4.8% CAGR in the forecast period.
On the flip side, the ongoing industry-wide trend of staffing shortages and supply chain-related hazards is denting growth for Zimmer Biomet. Deteriorating international trade and geopolitical complications have resulted in a tough situation related to raw material and labor costs as well as freight charges. Added to this, the rise in central bank policy rates to fight inflation, along with the gradual withdrawal of fiscal policies amid high debt, continues to dent economic growth, impacting the overall market situation for Zimmer Biomet.
Rising interest rates have put the dental treatment space (which is highly elective) in a tight spot. Within the Hip category, headwinds in Russia are disproportionately impacting the outside U.S. business. Further, within the S.E.T. category, Zimmer Biomet is facing challenges in the form of reimbursement headwinds, particularly in the Restorative Therapies business. In addition, the company also noted experiencing acute supply challenges within Sports and Trauma. All these are creating significant pressure on the company’s revenues and operating profit.
During the first quarter, the company incurred a 2.2% increase in the cost of products sold (excluding intangible asset amortization) and a 2.8% rise in selling, general and administrative expenses. Our model shows a 3.4% year-over-year increase in the company’s GAAP cost of products sold for 2024. SG&A expenses on a reported basis are expected to rise 5% in the same time frame.
Hims & Hers Heath stock has surged 129% in the past year. Estimates for the company’s earnings have risen from 11 cents to 18 cents for 2024 and from 25 cents to 33 cents for 2025 in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for Medpace’s 2024 earnings per share have moved up to $11.29 from $11.23 in the past 30 days. Shares of the company have surged 79.8% in the past year compared with the industry’s 3% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
Estimates for ResMed’s fiscal 2024 earnings per share have moved to $7.64 from $7.59 in the past 30 days. Shares of the company have declined 6.7% in the past year against the industry’s rise of 1.9%.
RMD’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.8%. In the last reported quarter, it delivered an earnings surprise of 10.9%.
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Zimmer Biomet (ZBH) Procedure Recovery Aids Amid Macro Woes
Zimmer Biomet (ZBH - Free Report) is witnessing volume improvement within Knee and Hip businesses. However, macroeconomic issues impede growth. The stock carries a Zacks Rank #3 (Hold) currently.
Zimmer Biomet has witnessed a rebound in its business in the past few quarters despite macroeconomic challenges. According to the company, procedure recovery continues, aided by no meaningful impact from staffing challenges. Accordingly, the company is enjoying a tailwind from increased provider capacity, resulting in backlog pull-through in the recent quarters.
Despite a sizable day rate headwind and difficult year-over-year comps in the first quarter, U.S. sales rose 3.7% year over year. Since the beginning of 2024, procedure volume has been very strong in both Knees and Hips, banking on an improved market scenario. International sales grew 5.4% year over year at a constant exchange rate. All regions benefited primarily from continued growth in the Knee category as well as strong commercial execution and new product uptake.
Global Knees growth was driven by the strong execution of the company’s four-pillar strategy, backed by a solid Persona portfolio and benefits of the ROSA robotics platform. Within Hips, where it lost market share in the last two years, the company expects to accelerate performance in 2024 with the addition of multiple new product offerings, one being the Z1 hip stem in the direct anterior hip category, which recently received an FDA nod.
Zimmer Biomet Holdings, Inc. Price
Zimmer Biomet Holdings, Inc. price | Zimmer Biomet Holdings, Inc. Quote
Further, sales growth in the S.E.T. category ( with double-digit growth in the areas of CMFT, upper extremities and sports), together with strong capital sales, improved the overall performance. In 2024 and beyond, Zimmer Biomet expects the S.E.T. business to continue to grow in mid-single-digits or above, banking on new innovations and product launches. Going by our model, S.E.T. business revenues are likely to witness a CAGR of 5.1% through 2026. The company’s Hips business is expected to witness a 4.8% CAGR in the forecast period.
On the flip side, the ongoing industry-wide trend of staffing shortages and supply chain-related hazards is denting growth for Zimmer Biomet. Deteriorating international trade and geopolitical complications have resulted in a tough situation related to raw material and labor costs as well as freight charges. Added to this, the rise in central bank policy rates to fight inflation, along with the gradual withdrawal of fiscal policies amid high debt, continues to dent economic growth, impacting the overall market situation for Zimmer Biomet.
Rising interest rates have put the dental treatment space (which is highly elective) in a tight spot. Within the Hip category, headwinds in Russia are disproportionately impacting the outside U.S. business. Further, within the S.E.T. category, Zimmer Biomet is facing challenges in the form of reimbursement headwinds, particularly in the Restorative Therapies business. In addition, the company also noted experiencing acute supply challenges within Sports and Trauma. All these are creating significant pressure on the company’s revenues and operating profit.
During the first quarter, the company incurred a 2.2% increase in the cost of products sold (excluding intangible asset amortization) and a 2.8% rise in selling, general and administrative expenses. Our model shows a 3.4% year-over-year increase in the company’s GAAP cost of products sold for 2024. SG&A expenses on a reported basis are expected to rise 5% in the same time frame.
Key Picks
Some better-ranked stocks in the broader medical space are Hims & Hers Health (HIMS - Free Report) , Medpace (MEDP - Free Report) and ResMed (RMD - Free Report) . Each of these presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Hims & Hers Heath stock has surged 129% in the past year. Estimates for the company’s earnings have risen from 11 cents to 18 cents for 2024 and from 25 cents to 33 cents for 2025 in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for Medpace’s 2024 earnings per share have moved up to $11.29 from $11.23 in the past 30 days. Shares of the company have surged 79.8% in the past year compared with the industry’s 3% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
Estimates for ResMed’s fiscal 2024 earnings per share have moved to $7.64 from $7.59 in the past 30 days. Shares of the company have declined 6.7% in the past year against the industry’s rise of 1.9%.
RMD’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.8%. In the last reported quarter, it delivered an earnings surprise of 10.9%.