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Here's Why You Should Retain Globus Medical (GMED) Stock Now

Zacks Equity Research

Globus Medical, Inc. GMED has an impressive growth trajectory, courtesy of robust expansion of its product portfolio.

In a month’s time, the stock has gained 2% against the industry’s 1.3% decline.

This renowned global developer of healthcare solutions for muscular disorders has a market cap of $5.06 billion. Also, it has an expected earnings growth rate of 12% for the next three to five years.

Banking on solid prospects, this Zacks Rank #3 (Hold) stock is worth retaining for now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 Key Catalysts

Steady Pace of Product Development: Following a robust first-quarter 2019, in terms of product launch, Globus Medical launched four additional systems in spine during the second quarter. Furthermore, the recently obtained FDA clearance for the company’s interbody module buoys  optimism. Globus Medical is currently on track to commercially market this product and launch its spine deformity solution in early fourth-quarter 2019.

Strong International Foothold: In the last reported quarter, Globus Medical’s international business grew 26.7% on a constant-currency basis. Growth was particularly strong in Japan, Spain, Italy and the United Kingdom. The company acquired the global operations and the distribution channel of Alphatec Holdings (Alphatec International) to amplify its worldwide base.

Globus Medical, Inc. Price

Globus Medical, Inc. Price

Globus Medical, Inc. price | Globus Medical, Inc. Quote

U.S. Spine Arm Expands Domestically: Globus Medical’s U.S. Spine business accelerated considerably in the second quarter, up 13% over the year-ago period. This reflects a steady growth trend over the past four quarters. Implant pull-through from ExcelsiusGPS placements and contributions from competitive recruiting were the primary growth drivers.

Concerns

Pricing Pressure Persists: The musculoskeletal devices industry is characterized by intensifying competitive pricing pressure. Hence, pricing continues to remain a major headwind for Globus Medical. In 2019, full-year pricing pressure is expected in the range of zero to negative 2%.

Escalating Expenses: In the second quarter of 2019, Globus Medical faced serious costs and expense pressure. Research and development expenses were up 12.5% due to increased investments in the INR platform. This has been putting pressure on the company's bottom line.

Which Way Are Estimates Treading?

For the third quarter of 2019, the Zacks Consensus Estimate for earnings is pegged at 43 cents. The figure indicates 9.7% rise from the year-ago quarter’s reported figure. The same for revenues stands at $186.6 million, calling for year-over-year growth of 10.3%.

For 2019, the Zacks Consensus Estimate for earnings is pegged at $1.71 that suggests 2.6% year-over-year growth. The same for revenues is pinned at $774.2 billion, which indicates an 8.6% rise from the prior-year quarter’s reported figure.

Key Picks

Some better-ranked stocks in the broader medical space are Medtronic MDT, Baxter BAX and Haemonetics HAE, each carrying a Zacks Rank #2 (Buy).

Medtronic’s long-term earnings growth rate is expected to be 7.13%.

Baxter’s long-term earnings growth rate is projected at 12.8%.

Haemonetics’ long-term earnings growth rate is expected to be 13.5%

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