Globus Medical (GMED) Stock Is Popping: Here's Why

On Thursday, shares of medical device company Globus Medical Inc. (NYSE:GMED) are popping, up almost 6% in late-morning trading after the firm announced that the FDA granted 510(k) clearance to one of its key products, the robotic guidance and navigation system Excelsius GPS.

The Excelsius GPS platform consists of robot-assisted surgery that is designed to integrate “intra-operative” CT and fluoroscopic imaging technologies. Globus, which is based in Audobon, Pennsylvania, said that FDA clearance includes minimally invasive surgeries, as well as open orthopedic and neurosurgical surgeries like screw placement in spinal and orthopedic procedures.

"Excelsius GPS™ is the culmination of years of research and development efforts and demonstrates Globus Medical's superior product development capabilities," said Norbert Johnson, Vice President of Robotics, Imaging, & Navigation.

"We believe the Excelsius GPS™ System will advance patient care and provide tangible benefits for surgeons and hospitals in terms of time, accuracy and reduced radiation exposure through the application of robotic and navigation technology in spine and orthopedic surgery,” Johnson continued.

Globus acquired Excelsius back in January 2014 in a deal valued between $20 million and $40 million. There were some initial setbacks with the robotics GPS system, and Globus had to re-file its 510(k) clearance bid last May after the FDA still had some unanswered questions about Excelsius GPS’s original application.

Looking at GMED stock, the company is currently a #4 (Sell) on the Zacks Rank, with a VGM score of ‘B.’ Globus expects year-over-year earnings growth of about 6.5% for the current year, with sales expected to increase almost 11% in the same time frame. Historically, the company has modest earnings growth of 5.8%, especially compared to its broader industry.

Speaking of its industry, Medical-Instruments sits in the bottom 42% of all 265 industries ranked on the Zacks Industry Rank, though the group has returned almost 15% year-to-date. Currently, GMED has a P/E of 23.06, and over the past 12 months, this metric has steadily increased. Globus is still cheaper than its industry—Medical-Instruments has a P/E of 27.47—but with its new robotics platform gaining clearance, it’s safe to assume GMED could continue to get more expensive moving forward.

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