Globus Medical Global Base Solid, Pricing Scenario Bothers

On Mar 29 2019, we initiated a research report on Globus Medical, Inc. (NYSE:GMED) . This Zacks Rank #3 (Hold) stock continues to drive significant demand for its Musculoskeletal Solutions products. Meanwhile, the company is strengthening its presence in the overseas markets through the expansion of direct and distributors sales force.

Globus Medical is a medical device company that develops and commercializes healthcare solutions for patients with musculoskeletal disorders. The company currently has its sales operations distributed across 52 counties worldwide.

The company is benefiting from a favorable demographic trend. The aging population is more prone to musculoskeletal degeneration, traumatic fractures and challenging complications. An Industry ARC report states that the Global Musculoskeletal Diseases market will witness a CAGR of almost 5.5% and generate a modest revenue uptick of $79.4 billion by 2023. Needless to add that this momentum is expected to boost higher demand for Globus Medical’s core products.

Globus Medical’s international revenues currently account for 17% of its total sales. At the end of last year, the company saw an existing direct or distributor sales presence across 51 countries outside the United States. Globus Medical is optimistic about its significant opportunities to fortify its footprint in both the existing and the new international markets via a steady expansion of direct and distributor sales forces and the commercialization of additional products.

However, we note that over the past three months, shares of Globus Medical have underperformed its industry. The stock has rallied 14.7% compared with the 22.9% rise of the industry.

Although the company registered better-than-expected earnings and a sturdy revenue performance in the last reported quarter, escalating costs and expenses dragged its margins down. This apart, the pricing scenario has been tough for Globus Medical. In 2019, full-year pricing pressure is expected in the range of 0-(2%).

Key Picks

Some better-ranked stocks in the broader medical space are Stryker Corporation (NYSE:SYK) , Penumbra, Inc., (NYSE:PEN) and Varian Medical Systems, Inc (NYSE:VAR) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker’s long-term earnings growth rate is projected to be 10%

Penumbra’s long-term earnings growth rate is predicted to be 20.9%.

Varian’s long-term earnings growth rate is estimated at 8%.

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