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Valued at a market cap of $20.4 billion, Zimmer Biomet Holdings, Inc. (ZBH) is a medical technology company based in Warsaw, Indiana. Its products and solutions are used to treat patients suffering from disorders of, or injuries to, bones, joints, or supporting soft tissues. The company serves orthopedic surgeons, neurosurgeons, hospitals, stocking distributors, healthcare dealers, and other specialists.
This medical technology company has underperformed the broader market over the past 52 weeks. Shares of ZBH have declined 6.5% over this time frame, while the broader S&P 500 Index ($SPX) has surged 16.4%. Moreover, on a YTD basis, the stock is down 2.7%, compared to SPX’s 9.7% uptick.
Narrowing the focus, ZBH has also lagged behind the iShares U.S. Medical Devices ETF’s (IHI) 8.8% return over the past 52 weeks and 6.1% YTD rise.
On Aug. 7, shares of ZBH surged 8% after its better-than-expected Q2 earnings release. The company’s overall revenue grew 7% year-over-year to $2.1 billion, surpassing consensus estimates by 2%. Furthermore, its adjusted EPS of $2.07 advanced 3% from the year-ago quarter and came in 4.5% above the analyst expectations. This strong quarterly performance was fueled by ZBH’s new product cycle, which delivered notable momentum in its U.S. Hips and Knees portfolios, along with sustained robust growth in its global Sports Medicine, Extremities, Trauma, Craniomaxillofacial, and Thoracic (S.E.T.) business.
For the current fiscal year, ending in December, analysts expect ZBH’s EPS to grow 2% year over year to $8.16. The company’s earnings surprise history is mixed. It topped the consensus estimates in three of the last four quarters, while missing on another occasion.
Among the 28 analysts covering the stock, the consensus rating is a "Moderate Buy” which is based on eight “Strong Buy,” two "Moderate Buy,” 16 “Hold,” and two “Strong Sell” ratings.
This configuration is slightly more bullish than two months ago, with seven analysts suggesting a “Strong Buy” rating.
On Aug. 11, Morgan Stanley (MS) analyst Patrick Wood maintained a "Hold" rating on ZBH and set a price target of $100.
The mean price target of $109.58 represents a 6.6% premium from ZBH’s current price levels, while the Street-high price target of $138 suggests an ambitious upside potential of 34.3%.
