Zimmer Biomet stock tumbled Thursday after the medtech company said implementing a new enterprise system would slug 2024 sales by 1%.
The Warsaw, Ind.-based company, which sells hip and knee replacements, is planning to implement an enterprise resources planning system. As a result, full-year sales and earnings will take a hit, Evercore ISI analyst Vijay Kumar said in a report.
"While it is intended to gradually get better throughout the year, more than half of the impact is in the third quarter," Kumar said. "Additionally, this will impact EPS (which the company is looking to mitigate) and geographically will primarily impact the U.S. and Canada."
Zimmer Biomet stock toppled 8.7%, closing at 104.47. The medtech stock is now trading below the lower boundary of a consolidation with a buy point at 133.90, according to IBD MarketSurge charts.
Zimmer Biomet: Lower Earnings Estimates
Analysts currently project adjusted earnings of $8.05 to $8.06 per share, according to FactSet and Evercore's Kumar. The Street estimates $7.73 billion in sales.
Zimmer Biomet expects to resolve most of these issues by year's end.
"This is not a manufacturing issue, but rather lower sales velocity due to the (enterprise resources planning) issue," Kumar said.
He kept his in-line rating and 113 price target on Zimmer Biomet stock, but said 2025 earnings could come down by 10 cents per share from his prior estimate of $8.65.
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