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Zimmer (ZBH) Stock Hits New 52-Week High: What's Driving It?

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Shares of Zimmer Biomet Holdings, Inc. ZBH reached a new 52-week high of $151.70 on Jan 22, closing the session marginally lower at $150.98. The stock has rallied 7.8% since its third-quarter 2019 earnings announcement on Nov 5.

The company’s strong third-quarter earnings results, backed by robust segmental and global revenue growth, prompted the rally. Currently, the company is reinforcing its focus toward enabling technology to provide a complete customer and patient-centric ecosystem.

Let us delve deeper.



Q3 Performance

Zimmer exited the third quarter on a strong note, with better-than-expected earnings and revenue numbers. It witnessed year-over-year improvements in revenues in the majority of its segments as well as across EMEA and the Asia Pacific.

Zimmer is upbeat about continuing the recent trend in the EMEA and the Asia Pacific in the upcoming quarters as well on product launches and strong customer adoptions. Despite a rise in the cost of products sold, the company registered gross margin improvement on solid top-line performance. This also buoyed investors’ optimism.

Other Growth Drivers

Approvals and Product Launches: Investors seem to be upbeat about Zimmer as it provides some top-of-the-line products in the industry. Strong adoption of its products like Persona Revision Knee System, commercially launched in September 2019, The Tether for treatment of scoliosis, and the FDA-cleared JuggerStitch meniscal repair device and ROSA ONE Spine System is a key catalyst.

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.

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. Completion of the detailed remediation plan on the Warsaw North campus is currently part of Zimmer’s pipeline.

Additionally, the company is gaining from the global rollout of the Quality Begins With Me program, which is focused on driving sustainable quality culture. Zimmer is increasingly focusing on innovations in enabling technology, regarding implants such as robotics and mini robotics, and informatics and operating room efficiency.

Zacks Rank & Key Picks

Currently, the company carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, Hill-Rom Holdings, Inc. HRC and Myomo, Inc. MYO.

Haemonetics currently sports a Zacks Rank #1 (Strong Buy) and has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hill-Rom’s long-term earnings growth rate is estimated at 11.7%. The company presently carries a Zacks Rank of 2 (Buy).

Myomo’s long-term earnings growth rate is expected at 25%. It currently has a Zacks Rank #2.

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Hill-Rom Holdings, Inc. (HRC) : Free Stock Analysis Report
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