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What's in the Cards for Zimmer Biomet's (ZBH) Q3 Earnings?

Zacks Equity Research

Zimmer Biomet Holdings, Inc. ZBH is set to report third-quarter 2019 results on Nov 5, before the market opens.

The company delivered a positive earnings surprise of 0.52% in the last reported quarter. The metric topped the consensus mark in three of the preceding four quarters, the average beat being 0.73%.

Let’s take a look at how things are shaping up prior to this announcement.

Key Catalysts

The company is likely to have registered strong sales growth in the Asia-Pacific and EMEA (Europe, Middle East, and Africa) regions during the third quarter benefiting from expanding sales organization, better sales execution on the back of more disciplined and rigorous operating mechanisms and product launches.

The S.E.T. (comprising Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma)arm is likely to have performed well in the third quarter owing to supply stability, which continues to grow sales force confidence, increased traction in the specialized sales channel and new products across the business. Earlier, the company noted that in the back half of 2019, it will accelerate heavy investments in its specialized sales channel to further intensify focus on the high-growth S.E.T. markets. This, in turn, might get reflected in third-quarter figures.

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. price-eps-surprise | Zimmer Biomet Holdings, Inc. Quote

Within Dental, the company has been gaining traction over the last few quarters, courtesy of strategic investments in priority areas and operational improvements. Despite persistent pressure in Bone Cement business, the overall bullish trend has most likely continued in the third quarter.

However, in Spine & CMF, the company is witnessing growth deceleration due to difficult comps. According to the company, this sluggishness is expected to continue through the first half of 2020. Also, the same is likely to get reflected in the to-be-reported results.

Pertaining to its product launch, over the past several months, Zimmer Biomet secured a number of important regulatory clearances for knee, brain and spine applications under its ROSA robotics platform. This apart, in September, the company received the FDA nod for its JuggerStitch meniscal repair device, the next-generation meniscus repair technology. We expect to see solid top-line contributions from this product array in the upcoming quarterly release.

Per Zimmer Biomet, its plan for the current year is strategized, focusing on its restructuring program rather than generating a profit motive. This is a two-year effort to streamline its operations. With this move, the company is trying to leverage its position with durable weighted average market growth by 2020. This momentum is also expected to get reflected in the company’s impending operating results.

Meanwhile, with Zimmer Biomet concentrating solely on its restructuring initiative, chances are slim for the company to deliver robust growth performances across its operating segments in any given quarter of 2019. The Zacks Consensus Estimate for third-quarter revenues of $1.98 billion indicates a mere 1.96% rise from the year-ago reported figure.

What Our Quantitative Model Suggests:

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. But this is not the case here as you will see below.

Earnings ESP: Zimmer Biomet has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Zimmer Biomet carries a Zacks Rank #4 (Sell). 

Stocks to Consider

Here are a few medical stocks worth considering from the broader medical space as these comprise the right mix of elements to exceed expectations this reporting cycle.

ViewRay, Inc. VRAY has a Zacks Rank #2 and an Earnings ESP of +14.36%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA XRAY has a Zacks Rank #3 and an Earnings ESP of +5.05%.

Aurora Cannabis Inc. ACB is Zacks #3 Ranked and has an Earnings ESP of +25.76%.

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Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
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