What's In The Cards For Zimmer Biomet (ZBH) In Q4 Earnings?

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is set to report fourth-quarter 2019 results on Feb 4, before market open.

The company delivered a positive earnings surprise of 0.57% in the last reported quarter. The metric beat the consensus mark in the preceding four quarters, the average beat being 0.41%.

Let’s take a look at how things are shaping up prior to this announcement.

Key Catalysts

The company’s multinational distribution agreement with Align (NASDAQ:ALGN) Technology (inked in September 2019) for the latter’s iTero Element family of intraoral scanners is expected to have contributed to the top line in the fourth quarter.

Zimmer Biomet is likely to have registered strong sales growth in the Asia Pacific, the Americas and EMEA (Europe, Middle East and Africa) regions in the fourth quarter on the solid performance of its knee portfolio.

The S.E.T. arm (comprising Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) is likely to have performed well in the fourth quarter, banking on supply stability, which continues to grow sales force confidence, increased traction in the specialized sales channel and new products across the business. Earlier, the company planned to prioritize innovation and accelerate investments in its specialized sales channel in the second half of 2019 to further intensify focus on high-growth S.E.T. markets. Impacts of this might get reflected in fourth-quarter results. Further, the ROSA portfolio has been performing well, which is likely to have continued in the fourth quarter as well.

Within Dental, the company has been gaining traction over the past few quarters, courtesy of investments in priority areas and operational improvements.

However, in Spine & CMF, Zimmer Biomet has been witnessing growth deceleration due to difficult comps.

Over the past several months, Zimmer Biomet has been securing a number of important regulatory clearances for knee, brain and spine applications under its ROSA robotics platform. Strength in its FDA-cleared JuggerStitch meniscal repair device, which is the next-generation meniscus repair technology, along with robust product array is expected to have contributed to the top line in the quarter.

Per Zimmer Biomet, impacts of the focus on its restructuring program instead of generating a profit motive in 2019, which is a two-year effort to streamline its operations, are likely to get reflected in fourth-quarter results. The momentum from the move is also expected to get reflected in the company’s operating results.

Meanwhile, as Zimmer Biomet has been concentrating solely on its restructuring initiative, its operating segments are unlikely to have delivered robust performances in the fourth quarter.

Further, for 2019, the company expects the impact of foreign exchange to be at the high end of 125-175 basis points.

Q4 & 2019 Estimates

The Zacks Consensus Estimate for total revenues of $2.11 billion suggests growth of 1.7% from the prior-year quarter’s reported figure. Also, the consensus mark for earnings of $2.26 per share indicates a 3.67 % rise from the year-ago quarter's reported figure.

For the year, the Zacks Consensus Estimate for total revenues is pegged at $7.96 billion. The same for earnings is pegged at $7.83 per share, suggesting an improvement of 2.49% from the year-ago period.

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Zimmer Biomet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Zimmer Biomet has an Earnings ESP of +0.38%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering, as these too have the right combination of elements to post an earnings beat this quarter.

DexCom, Inc. (NASDAQ:DXCM) currently has an Earnings ESP of +17.07% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA Inc. (NASDAQ:XRAY) presently has an Earnings ESP of +1.16% and a Zacks Rank #2.

Tandem Diabetes Care, Inc. (NASDAQ:TNDM) has an Earnings ESP of +27.59%. It currently sports a Zacks Rank #1.

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