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Market Share Gains Aid Zimmer Biomet Stock Amid Cost Pressure
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Zimmer Biomet's (ZBH - Free Report) strategic product launches and stabilizing market trends bolster our confidence in this stock. However, factors like macroeconomic uncertainties put pressure on the bottom line. The stock carries a Zacks Rank #3 (Hold).
Zimmer Biomet has been witnessing strong market share gains within the reconstructive Knees and Hips businesses in key geographies despite macroeconomic challenges. According to the company, procedure growth continues successfully, aided by no meaningful impact from staffing challenges. The company is, in fact, enjoying the tailwind from increased provider capacity, resulting in backlog pull-through in the recent quarters.
Zimmer Biomet is on a diversification journey with its Sports Medicine, Extremities and Trauma (S.E.T.) business. The company has strategically grown S.E.T. sales by at least mid-single digits in recent times. Zimmer Biomet expects this trend to continue through 2024 and also in 2025 and 2026.
Zimmer Biomet is currently focusing on ROSA Robotic Platform expansion. Following the company’s alliance with THINK Surgical, Zimmer Biomet has become the only orthopedic company in the world that will offer both a handheld CT scan-based system in the TMINI, exclusive for the Zimmer Biomet platform, as well as a simplified, CT scan-less robotic system in the current form factor of ROSA for total knee arthroplasty.
In terms of Persona cementless Knee, the company is currently witnessing strong uptake of the cementless platform Persona OsseoTi. Zimmer Biomet is optimistic about the full launch of Persona IQ in 2024.
Major Concerns for ZBH
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 lead to a tough situation related to raw material and labor cost as well as freight charges. Added to this, higher rates to fight inflation, along with the gradual withdrawal of fiscal policies amid increased debt, continue to dent economic growth, impacting the overall market situation for Zimmer Biomet.
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 acute supply challenges within Sports and Trauma. All these are creating significant pressure on the company’s revenues and operating profit.
During the second quarter, the company incurred a 5.3% increase in the cost of products sold (excluding intangible asset amortization) and a 1.6% rise in selling, general and administrative expenses. Our model shows a 3.7% increase in the company’s GAAP cost of products sold for 2024. SG&A expenses on a reported basis are expected to rise 2% in the same time frame.
Intuitive Surgical’s shares have surged 52.9% in the past year. Estimates for the company’s earnings have remained constant at $6.67 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.97%. In the last reported quarter, it posted an earnings surprise of 16.34%.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 48.1% to $1.20 in the past 30 days. Shares of the company have risen 155% in the past year compared with the industry’s 8.6% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Boston Scientific’s 2024 EPS have increased 1.7% to $2.40 in the past 30 days. In the past year, shares of BSX have risen 48.6% compared with the industry’s 12.5% growth.
In the last reported quarter, BSX delivered an earnings surprise of 6.90%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.
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Market Share Gains Aid Zimmer Biomet Stock Amid Cost Pressure
Zimmer Biomet's (ZBH - Free Report) strategic product launches and stabilizing market trends bolster our confidence in this stock. However, factors like macroeconomic uncertainties put pressure on the bottom line. The stock carries a Zacks Rank #3 (Hold).
Zimmer Biomet has been witnessing strong market share gains within the reconstructive Knees and Hips businesses in key geographies despite macroeconomic challenges. According to the company, procedure growth continues successfully, aided by no meaningful impact from staffing challenges. The company is, in fact, enjoying the tailwind from increased provider capacity, resulting in backlog pull-through in the recent quarters.
Zimmer Biomet is on a diversification journey with its Sports Medicine, Extremities and Trauma (S.E.T.) business. The company has strategically grown S.E.T. sales by at least mid-single digits in recent times. Zimmer Biomet expects this trend to continue through 2024 and also in 2025 and 2026.
Zimmer Biomet is currently focusing on ROSA Robotic Platform expansion. Following the company’s alliance with THINK Surgical, Zimmer Biomet has become the only orthopedic company in the world that will offer both a handheld CT scan-based system in the TMINI, exclusive for the Zimmer Biomet platform, as well as a simplified, CT scan-less robotic system in the current form factor of ROSA for total knee arthroplasty.
In terms of Persona cementless Knee, the company is currently witnessing strong uptake of the cementless platform Persona OsseoTi. Zimmer Biomet is optimistic about the full launch of Persona IQ in 2024.
Major Concerns for ZBH
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 lead to a tough situation related to raw material and labor cost as well as freight charges. Added to this, higher rates to fight inflation, along with the gradual withdrawal of fiscal policies amid increased debt, continue to dent economic growth, impacting the overall market situation for Zimmer Biomet.
Zimmer Biomet Holdings, Inc. Price
Zimmer Biomet Holdings, Inc. price | Zimmer Biomet Holdings, Inc. Quote
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 acute supply challenges within Sports and Trauma. All these are creating significant pressure on the company’s revenues and operating profit.
During the second quarter, the company incurred a 5.3% increase in the cost of products sold (excluding intangible asset amortization) and a 1.6% rise in selling, general and administrative expenses. Our model shows a 3.7% increase in the company’s GAAP cost of products sold for 2024. SG&A expenses on a reported basis are expected to rise 2% in the same time frame.
Key Picks
Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , TransMedics Group (TMDX - Free Report) and Boston Scientific (BSX - Free Report) . While Intuitive Surgical and TransMedics sport a Zacks Rank #1 (Strong Buy) each, Boston Scientific currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s shares have surged 52.9% in the past year. Estimates for the company’s earnings have remained constant at $6.67 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.97%. In the last reported quarter, it posted an earnings surprise of 16.34%.
Estimates for TransMedics’ 2024 earnings per share (EPS) have moved up 48.1% to $1.20 in the past 30 days. Shares of the company have risen 155% in the past year compared with the industry’s 8.6% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Boston Scientific’s 2024 EPS have increased 1.7% to $2.40 in the past 30 days. In the past year, shares of BSX have risen 48.6% compared with the industry’s 12.5% growth.
In the last reported quarter, BSX delivered an earnings surprise of 6.90%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.