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Zimmer Biomet (ZBH) to Report Q3 Earnings: What's in Store?

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Zimmer Biomet Holdings, Inc. ZBH is set to report third-quarter 2021 results on Nov 4, before market open.

In the last reported quarter, the company’s earnings of $1.90 beat the Zacks Consensus Estimate by 3.26%. Over the trailing four quarters, its earnings outperformed the consensus estimate on all occasions, the average beat being 22.83%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Zimmer Biomet has been witnessing strong recovery of its legacy business since the beginning of 2021. This has been primarily driven by an expanded vaccination drive and the gradual opening up of the economy that led people to once again opt for non-COVID elective orthopedic and musculoskeletal procedures. The company’s Q3 top-line result is expected to reflect this procedure volume improvement. However, on a sequential basis, the company might have faced a temporary setback during the third-quarter months when new COVID-19 cases increased, thus impacting hospital-based procedures to some extent.

The S.E.T. business (comprising Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma), the company’s major focus area, put up an extremely strong second-quarter performance. We expect this arm to deliver strong results in the to-be-reported quarter as well on the back of the company’s focus on sports and extremities, especially upper extremities, trauma and CMFT (Craniomaxillofacial Trauma). Zimmer Biomet is likely to have gained from its increasing presence in the field of Ambulatory Surgery Centers. Also, strong surgeon registrations of the Signature One surgical planning system for shoulder procedures are likely to have driven growth in Q3.

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

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

Ahead of the planned spin-off of the company’s Dental and Spine business, we note that irrespective of the COVID-19 impact, Zimmer Biomet has been witnessing growth deceleration in the recent quarters, mainly due to unfavorable pricing. However, over the past few months, the segment has been witnessing business recovery on the back of strong commercial execution, new product launches, including robotics, and overall market recovery. This momentum is likely to have continued during the third quarter as well, primarily driven by an ongoing strong recovery along with expected robust contributions from implants and digital solutions in the dental business. Further, wider market adoption of robotics and contributions from Mobi-C and Tether within Spine are likely to have contributed to the growth.

We expect the company to have witnessed strength in its performances within its Hips and Knees product portfolio in the United States, which is better equipped for pandemic support compared to the non-U.S. markets of Zimmer Biomet. The nature of the business, which is non-elective, might have continued with year-over-year growth in Q3. Despite the recent surge in cases following the emergence of the Delta virus, the robust performance of Avenir Complete is likely to have continued during the second quarter as well, thus driving the Hip business. Also, strong demand for ROSA Knee, along with strong momentum for Persona Revision, is likely to have continued through the to-be-reported quarter. The company’s two recent regulatory developments, including FDA 510(k) clearance of the ROSA Hip System for robotically-assisted direct anterior total hip replacement and FDA De Novo classification grant to market the tibial extension for Persona IQ, the world's first and only smart knee for total knee replacement surgery, both in August should have contributed partly to the third quarter’s top line.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $1.96 billion, suggesting a 1.5% increase from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s third-quarter 2021 earnings per share of $1.76 indicates a 2.8% decline from the year-ago adjusted earnings.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a higher chance of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Zimmer Biomet has an Earnings ESP of -2.66%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are a few medical stocks that have the right combination of elements to beat on earnings this reporting cycle.

Becton, Dickinson and Company BDX has an Earnings ESP of +2.02% and a Zacks Rank of 2. The company will release fourth-quarter fiscal 2021 results on Nov 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Insulet Corporation PODD has an Earnings ESP of +15.79% and a Zacks Rank of 2. The company is scheduled to release third-quarter 2021 results on Nov 4.

Vertex Pharmaceuticals Incorporated VRTX has an Earnings ESP of +10.62% and a Zacks Rank of 2. The company will report third-quarter 2021 results on Nov 2.

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Becton, Dickinson and Company (BDX) : Free Stock Analysis Report

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Insulet Corporation (PODD) : Free Stock Analysis Report

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

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