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Warsaw, Indiana-based Zimmer Biomet Holdings, Inc. (ZBH) operates as a medical technology company. It designs, manufactures, and markets orthopedic reconstructive products. With a market cap of $23 billion, Zimmer Biomet serves orthopedic surgeons, neurosurgeons, hospitals, healthcare dealers, and more.
The medical device manufacturer has substantially underperformed the broader market over the past year. Over the past 52 weeks, ZBH dipped 6.3% compared to the S&P 500 Index’s ($SPX) 28.1% returns. In 2024 alone, ZBH is down 8.3% versus SPX’s 17.3% gains on a YTD basis.
Narrowing the focus, ZBH has also underperformed the US Medical Devices Ishares ETF’s (IHI) 10.9% returns over the past 52 weeks and 5.9% gains on a YTD basis.
Despite surpassing Wall Street’s top and bottom-line estimates, shares of Zimmer Biomet dipped 3.4% following its Q2 earnings release on Aug. 7. The company’s Q2 sales grew 3.9% annually to $1.9 billion, and adjusted EPS rose 10.4% to $2.01.
However, due to the expected impact of currency exchange, the company reduced its fiscal 2024 revenue growth guidance from 4.5% to 5.5% range to 4% to 5% range, which is making investors jittery and leading to a dip in share prices.
For the current fiscal year, ending in December, analysts expect Zimmer Biomet to report an EPS growth of 6.8% year over year to $8.06. Moreover, the company’s earnings surprise history is robust. It beat the consensus estimates in all of the last four quarters. Its EPS for the last reported quarter surpassed the consensus estimates by 1.5%.
Among the 27 analysts covering the ZBH stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, two “Moderate Buys,” 16 “Holds,” and two “Strong Sells.”
This configuration is slightly less bullish than two months ago when eight analysts recommended “Strong Buys.”
On Aug. 8, RBC Capital analyst Shagun Singh Chadha maintained a “Buy” rating with a price target of $130.
ZBH’s mean price target of $126.46 represents a premium of 13.3% from current price levels. The Street-high target of $145 indicates a potential upside of 29.9%.
On the date of publication, Aditya Sarawgi 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.
