On Dec 22, we issued an updated research report on Warsaw, IN-based Zimmer Biomet Holdings Inc. (NYSE:ZBH) . The company carries a Zacks Rank #4 (Sell).
Over the last six months, this leading musculoskeletal healthcare company has been trading below the broader industry on macroeconomic uncertainties, pricing pressure and unfavorable currency fluctuations. The stock has lost 6.3% of its value versus the broader industry's 2.3% gain.
Per management, Zimmer Biomet is grappling with headwinds such as supply delay of certain products — causing its inability to win back lost customers in the United States and tap the new ones — softened domestic market conditions, the impact of consecutive hurricanes and a significant price reduction in the Indian knee market. The trimmed 2017 guidance, issued last quarter during the result announcement, adds to our concerns indicating little chances of recovery ahead.
The estimate revision trend for 2017 also remains unfavorable with 17 estimates having moved south and none in the opposite direction over the past couple of months. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 21 cents downward over this period to $8.03 per share.
On a positive note, we look forward to the synergies expected to be drawn from the recently completed LDR Holding acquisition, which should broaden and complement the company's musculoskeletal offering. This is in line with its strategy to grow through inorganic means by focusing on mega buyouts. We also pin high hopes on the strong tactical and financial goals the combined entity aims to reach, now that the deal has been sealed.
Zimmer Biomet has been of late working to fortify its foothold in the emerging markets with potential to provide long-term opportunities. Good news is that the company's planned investments in these regions over several quarters with a view to enhance operational and sales performance are also yielding results.
Key Picks
A few better-ranked medical stocks are Bio-Rad Laboratories (NYSE:BIO) , Baxter International Inc. (NYSE:BAX) and ICU Medical Inc. (NASDAQ:ICUI) . Notably, Bio Rad Laboratories sports a Zacks Rank #1. Baxter International Inc. and ICU Medical Inc. sport a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.
Bio-Radhas a long-term growth estimate of 140.65% in the next quarter. The stock has rallied roughly 33.2% over a year.
Baxter International has a growth estimate of 7.33% in the next quarter. The stock has rallied roughly 45.9% over a year.
ICU Medical has a long-term growth estimate of 40.63% in the next year. The stock has rallied roughly 47.6% over a year.
"Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Baxter International Inc. (BAX): Free Stock Analysis Report
Bio-Rad Laboratories, Inc. (BIO): Free Stock Analysis Report
ICU Medical, Inc. (ICUI): Free Stock Analysis Report
Zimmer Biomet Holdings, Inc. (ZBH): Free Stock Analysis Report
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