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Zimmer Biomet Holdings, Inc. (ZBH), headquartered in Warsaw, Indiana, designs, manufactures, and sells medical equipment. Valued at $18.1 billion by market cap, the company offers orthopedic, dental, and spinal reconstructive implants, as well as bone cement and related surgical products.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and ZBH perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the medical devices industry. ZBH is a leader in the orthopedic implant industry, known for its quality and innovation in large joint reconstructive surgery. With a strong market presence in the U.S., Europe, and Japan, the company has a loyal customer base. Its strategic acquisitions enhance product offerings and market position, driving long-term growth for the company.
Despite its notable strength, ZBH slipped 21% from its 52-week high of $116.71, achieved on Sep. 3, 2024. Over the past three months, ZBH stock declined 16.2%, underperforming the Nasdaq Composite’s ($NASX) 11% gains during the same time frame.
In the longer term, shares of ZBH dipped 12.8% on a YTD basis and fell 14% over the past 52 weeks, underperforming NASX’s YTD gains of 2% and 11.4% returns over the last year.
To confirm the bearish trend, ZBH has been trading below its 200-day moving average over the past year, experiencing some fluctuations. The stock is trading below its 50-day moving average since early April.
ZBH’s underperformance is due to staffing shortages, supply chain issues, and geopolitical challenges impacting raw material costs and economic growth. The company is facing headwinds in Russia and reimbursement challenges in their Restorative Therapies business. The ongoing tariff issue is expected to impact operating profit in 2025, with a potential decrease in adjusted operating margins. Foreign exchange rate fluctuations have also affected net sales.
On May 5, ZBH shares closed down more than 11% after reporting its Q1 results. Its adjusted EPS of $1.81 surpassed Wall Street expectations of $1.76. The company’s revenue was $1.91 billion, surpassing Wall Street forecasts of $1.89 billion. ZBH expects full-year adjusted EPS in the range of $7.90 to $8.10.
In the competitive arena of medical devices, Smith & Nephew plc (SNN) has taken the lead over ZBH, showing resilience with a 15.8% uptick over the past 52 weeks and 19.2% gains on a YTD basis.
Wall Street analysts are moderately bullish on ZBH’s prospects. The stock has a consensus “Moderate Buy” rating from the 27 analysts covering it, and the mean price target of $106.46 suggests a potential upside of 15.5% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
