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Here's Why You Should Add Zimmer (ZBH) to Your Portfolio

Zacks Equity Research
·3 mins read

Zimmer Biomet Holdings, Inc. ZBH has been gaining from robust segmental and international revenue growth along with product launches. Currently, the company is shifting focus toward enabling technology to provide a complete ecosystem, which is customer and patient centric.

Over the past year, shares of the Zacks Rank #2 (Buy) company have outperformed its industry. The stock has gained 28.9% compared with 13.8% growth of the industry. Also, the company has outperformed the 24.5% rally of the S&P 500 during the same period.

The renowned musculoskeletal healthcare provider has a market capitalization of $32.17 billion. The company projects 7.1% growth for the next five years and expects to maintain its strong segmental performance. Further, it delivered a positive earnings surprise of 0.85%, on average, in the trailing four quarters.

 


 

Let’s delve deeper.

Q4 Results: We are upbeat about Zimmer’s robust fourth-quarter results. The company witnessed strong sales growth across all geographies, including the Americas, the Asia Pacific and EMEA regions. Most operating segments also registered strong growth at a constant exchange rate. Zimmer is optimistic about continuing the recent trend in the EMEA and the Asia Pacific on product launches and strong customer adoptions.

Also, margin expansions and the company's increased focus on innovation (as reflected through high R&D expenses) buoy optimism.

Approvals and Product Launches: We are optimistic about Zimmer’s top-of-the-line products like Persona Revision Knee System, The Tether for treatment of scoliosis, and the FDA-cleared JuggerStitch meniscal repair device and ROSA ONE Spine System. The company’s mymobility digital health platform (developed in partnership with Apple in October 2018), and the major launch of flagship products like Persona Partial and Persona Cementless instill optimism as well.

Strong momentum for the Avenir Complete products after its launch bodes well for the company’s product performance.

Partnership: Zimmer signed a multinational distribution agreement with Align Technology with respect to the iTero Element family of intraoral scanners. The agreement is expected to expand Zimmer’s footprint in the global digital restorative dentistry solutions market.

Execution of Growth Plans: The company is progressing well with the quality remediation in the North Campus, which it initiated in the third quarter of 2019. Currently Zimmer is on track with the completion of the detailed remediation plan on the Warsaw North campus.

Estimate Trend

The company is witnessing a positive estimate revision trend for 2020. Over the past seven days, the Zacks Consensus Estimate for its earnings has inched up 0.2% to $8.32 per share.

The Zacks Consensus Estimate for the company’s first-quarter fiscal 2020 revenues is pegged at $2.04 billion, suggesting 3.3% rise from the year-ago reported number.

Other Key Picks

A few other top-ranked stocks from the broader medical space are LeMaitre Vascular, Inc. LMAT, Hill-Rom Holdings, Inc. HRC and ResMed Inc. RMD.

LeMaitre currently has a Zacks Rank #2 and a projected long-term earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hill-Rom’s long-term earnings growth rate is estimated at 11.1%. The company presently carries a Zacks Rank of 2.

ResMed’s long-term earnings growth rate is expected at 12%. It currently has a Zacks Rank #1.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


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ResMed Inc. (RMD) : Free Stock Analysis Report
 
Hill-Rom Holdings, Inc. (HRC) : Free Stock Analysis Report
 
LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
 
Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
 
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