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Should You Consider Retaining ZBH Stock in Your Portfolio Now?
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Zimmer Biomet's (ZBH - Free Report) strategic efforts to drive growth in the Knee business are anchored by four meaningful pillars. The stabilization of the global musculoskeletal market is encouraging for future growth. By expanding its portfolio to include upper and lower joints, the company is enhancing its presence in emerging markets. Meanwhile, a debt-burdened balance sheet and adverse currency movements remain concerns for ZBH’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has dropped 2.7% in value against the 15.5% growth of the industry and the 22.2% rise of the S&P 500 composite.
The leading musculoskeletal healthcare company has a market capitalization of $23.51 billion. Zimmer Biomet surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 2.84%.
Catalysts to ZBH Stock
Four-Pillar Strategy to Expand Knee Business: Zimmer Biomet has implemented four pillars inside its Knee business to drive pricing stability, mix benefits and competitive conversions. Firstly, the company is focusing on the combination of ROSA Robotic Platform and Persona cementless Knee, aiming to increase its market penetration from the current 20% level to the 50-60% range.
Thanks to its partnership with THINK Surgical, ZBH is now the only orthopedic company in the world that will offer the TMINI handheld, CT scan-based system, and a simplified, CT scan-less robotic system in the current form factor of ROSA for total knee arthroplasty.
The second pillar is focused on Persona revision, providing meaningful conversion and mix opportunities inside the revision category. Under the third pillar, Zimmer Biomet plans to work on the overall shift of the company’s legacy knee systems to a fully rounded-out Persona portfolio. The fourth pillar focuses on the development of the world's first Smart Knee- Persona iQ, for which the company has recently received the FDA’s 510(K) approval.
Gradually Stabilizing Market: Despite pricing pressures, the last few quarters witnessed gradual stability in the global musculoskeletal market, with better-than-expected sales growth in certain geographies on the back of improved procedural volume. This was driven by favorable demographics and the growing utilization of musculoskeletal healthcare in emerging markets and under-penetrated developed markets. The second quarter of 2024 marked another positive quarter of year-over-year momentum in large joints, with the overall global Knees, Hips and S.E.T. business growing 5.5%, 2.8% and 7.3%, respectively, at the constant exchange rate.
Image Source: Zacks Investment Research
Promising Market Opportunities: The global orthopedic implants market is poised for significant growth, owing to the increasing prevalence of musculoskeletal disorders, advancements in healthcare infrastructure and rising awareness about minimally invasive surgical techniques. The preference for minimally invasive surgeries, which leads to shorter recovery times and reduced hospital costs, remains a key driver for market expansion. Zimmer Biomet is diligently working to strengthen its foothold in internationally developed and emerging markets that provide long-term opportunities for growth. The business is benefitting from its strong presence in emerging markets with an extended portfolio that includes upper and lower joints.
Within emerging markets, strength in the Asia Pacific market continues to drive strong revenue growth.
Factors Weighing on Zimmer Biomet Stock
Leveraged Capital Structure: Zimmer Biomet exited the second quarter of 2024 with cash and cash equivalents of $420 million and a near-term-payable debt of $1.87 billion on its balance sheet. Total debt came up to $5.84 billion, much higher than the corresponding cash and cash equivalent level. This massive debt burden raises concerns regarding the company’s liquidity position.
Exposed to Currency Movement: A substantial portion of Zimmer Biomet’s foreign revenues is generated in Europe and Japan. The significant increases in the value of the U.S. Dollar against the Euro, the Japanese Yen, the Swiss Franc or other currencies of late are having adverse effects on the company’s results of operations. In the second quarter, Zimmer Biomet’s net sales were adversely affected by 1.7% from changes in foreign exchange rates.
ZBH Stock Estimate Trend
The Zacks Consensus Estimate for Zimmer Biomet’s 2024 earnings per share has decreased 0.5% to $8.06 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $7.72 billion. This suggests a 4.5% rise from the year-ago reported number.
TransMedix Group’s earnings are expected to surge 255.8% in 2024. Its shares have soared 130.6% compared with the industry’s 9.5% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
Veracyte has an estimated earnings growth rate of 112.8% compared with the industry’s 12.4%. Shares of the company have soared 13.4% compared with the industry’s 9.4% rise over the past year.
VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.9%. Shares of the company have rallied 51.3% compared with the industry’s 15.5% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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Should You Consider Retaining ZBH Stock in Your Portfolio Now?
Zimmer Biomet's (ZBH - Free Report) strategic efforts to drive growth in the Knee business are anchored by four meaningful pillars. The stabilization of the global musculoskeletal market is encouraging for future growth. By expanding its portfolio to include upper and lower joints, the company is enhancing its presence in emerging markets. Meanwhile, a debt-burdened balance sheet and adverse currency movements remain concerns for ZBH’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has dropped 2.7% in value against the 15.5% growth of the industry and the 22.2% rise of the S&P 500 composite.
The leading musculoskeletal healthcare company has a market capitalization of $23.51 billion. Zimmer Biomet surpassed estimates in each of the trailing four quarters, delivering an average earnings surprise of 2.84%.
Catalysts to ZBH Stock
Four-Pillar Strategy to Expand Knee Business: Zimmer Biomet has implemented four pillars inside its Knee business to drive pricing stability, mix benefits and competitive conversions. Firstly, the company is focusing on the combination of ROSA Robotic Platform and Persona cementless Knee, aiming to increase its market penetration from the current 20% level to the 50-60% range.
Thanks to its partnership with THINK Surgical, ZBH is now the only orthopedic company in the world that will offer the TMINI handheld, CT scan-based system, and a simplified, CT scan-less robotic system in the current form factor of ROSA for total knee arthroplasty.
The second pillar is focused on Persona revision, providing meaningful conversion and mix opportunities inside the revision category. Under the third pillar, Zimmer Biomet plans to work on the overall shift of the company’s legacy knee systems to a fully rounded-out Persona portfolio. The fourth pillar focuses on the development of the world's first Smart Knee- Persona iQ, for which the company has recently received the FDA’s 510(K) approval.
Gradually Stabilizing Market: Despite pricing pressures, the last few quarters witnessed gradual stability in the global musculoskeletal market, with better-than-expected sales growth in certain geographies on the back of improved procedural volume. This was driven by favorable demographics and the growing utilization of musculoskeletal healthcare in emerging markets and under-penetrated developed markets. The second quarter of 2024 marked another positive quarter of year-over-year momentum in large joints, with the overall global Knees, Hips and S.E.T. business growing 5.5%, 2.8% and 7.3%, respectively, at the constant exchange rate.
Image Source: Zacks Investment Research
Promising Market Opportunities: The global orthopedic implants market is poised for significant growth, owing to the increasing prevalence of musculoskeletal disorders, advancements in healthcare infrastructure and rising awareness about minimally invasive surgical techniques. The preference for minimally invasive surgeries, which leads to shorter recovery times and reduced hospital costs, remains a key driver for market expansion. Zimmer Biomet is diligently working to strengthen its foothold in internationally developed and emerging markets that provide long-term opportunities for growth. The business is benefitting from its strong presence in emerging markets with an extended portfolio that includes upper and lower joints.
Within emerging markets, strength in the Asia Pacific market continues to drive strong revenue growth.
Factors Weighing on Zimmer Biomet Stock
Leveraged Capital Structure: Zimmer Biomet exited the second quarter of 2024 with cash and cash equivalents of $420 million and a near-term-payable debt of $1.87 billion on its balance sheet. Total debt came up to $5.84 billion, much higher than the corresponding cash and cash equivalent level. This massive debt burden raises concerns regarding the company’s liquidity position.
Exposed to Currency Movement: A substantial portion of Zimmer Biomet’s foreign revenues is generated in Europe and Japan. The significant increases in the value of the U.S. Dollar against the Euro, the Japanese Yen, the Swiss Franc or other currencies of late are having adverse effects on the company’s results of operations. In the second quarter, Zimmer Biomet’s net sales were adversely affected by 1.7% from changes in foreign exchange rates.
ZBH Stock Estimate Trend
The Zacks Consensus Estimate for Zimmer Biomet’s 2024 earnings per share has decreased 0.5% to $8.06 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $7.72 billion. This suggests a 4.5% rise from the year-ago reported number.
Top MedTech Stocks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , Veracyte (VCYT - Free Report) and Boston Scientific (BSX - Free Report) . While TransMedix Group and Veracyte currently sport a Zacks Rank #1 (Strong Buy), Boston Scientific carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedix Group’s earnings are expected to surge 255.8% in 2024. Its shares have soared 130.6% compared with the industry’s 9.5% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
Veracyte has an estimated earnings growth rate of 112.8% compared with the industry’s 12.4%. Shares of the company have soared 13.4% compared with the industry’s 9.4% rise over the past year.
VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.9%. Shares of the company have rallied 51.3% compared with the industry’s 15.5% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.