Zimmer Biomet Holdings, Inc. Released Earnings Last Week And Analysts Lifted Their Price Target To US$172
It's been a good week for Zimmer Biomet Holdings, Inc. (NYSE:ZBH) shareholders, because the company has just released its latest full-year results, and the shares gained 5.2% to US$159. Zimmer Biomet Holdings reported in line with analyst predictions, delivering revenues of US$8.0b and statutory earnings per share of US$5.47, suggesting the business is executing well and in line with its plan. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Zimmer Biomet Holdings
Taking into account the latest results, the current consensus from Zimmer Biomet Holdings's 26 analysts is for revenues of US$8.22b in 2020, which would reflect a reasonable 3.0% increase on its sales over the past 12 months. Statutory per share are forecast to be US$5.46, approximately in line with the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$8.16b and earnings per share (EPS) of US$5.83 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
Although analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 6.1% to US$172, suggesting the revised estimates are not indicative of a weaker long-term future for the business. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Zimmer Biomet Holdings analyst has a price target of US$190 per share, while the most pessimistic values it at US$125. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Zimmer Biomet Holdings's performance in recent years. We would highlight that Zimmer Biomet Holdings's revenue growth is expected to slow, with forecast 3.0% increase next year well below the historical 9.3%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 7.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Zimmer Biomet Holdings.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zimmer Biomet Holdings. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Zimmer Biomet Holdings going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Zimmer Biomet Holdings's balance sheet, and whether we think Zimmer Biomet Holdings is carrying too much debt, for free on our platform here.
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