Globus Medical GMED continues to gain from surging demand for its Musculoskeletal Solutions products. Meanwhile, the company is expanding in the overseas markets through the expansion of direct and distributors sales force. The stock carries a Zacks Rank #2 (Buy) currently.
Factors Driving GMED's Shares
Globus Medical merged its business with NuVasive. The combined company has formed a global musculoskeletal company focused on rapid innovation, addressing unmet clinical needs and improving offerings to surgeons and patients. The combination capitalizes on GMED’s complementary commercial organization and should allow the company to accelerate its globalization strategies to increase customer reach and strengthen surgeon relationships.
The combined company is working on bringing best-in-class technologies to create a differentiated and comprehensive procedural solution offering as part of its approach to address unmet clinical needs and support surgeons and patients. Earlier management noted that the combined company expects to generate a total of $170 million over three years due to the merger with NuVasive, with 40% being realized in year one, 70% by the end of year two and 100% in year three.
In the third quarter, the combined trauma and NuVasive specialty orthopedic (NSO) business delivered 99% growth. This was driven by continued strong performance, market penetration of the base trauma business and the fast uptake of NSO.
Globus Medical is gaining market share in the musculoskeletal solutions space, banking on the strong performance of its implantable devices, biologics, accessories and unique surgical instruments used in an expansive range of spinal, orthopedic and neurosurgical procedures. The company is particularly seeing notable gains across its product portfolio in expandables, biologics, MIS screws, 3D printed implants and cervical offerings.
Globus Medical, Inc. Price
Globus Medical, Inc. price | Globus Medical, Inc. Quote
In the third quarter, Globus Medical’s proforma musculoskeletal revenues (assuming NuVasive revenues in the year-ago period) improved 5.4%, making it the fourth consecutive quarter of pro forma musculoskeletal revenue growth. The growth was driven primarily by strong contributions from the company’s U.S. and international spine businesses. Third-quarter Enabling Technologies revenues grew 39% year over year, driven by increased sales within the U.S. market across the EGPS and E3D products.
During the third quarter of 2024, the company launched four new products. Among the launches, the Excelsius navigation hub pairs navigational accuracy with patient safety features. It is currently the only freehand navigation system on the market to offer the versatility of three distinct imaging workflows. Then, there is the Actify 3D Total Knee system that pairs cementless reconstruction with operative efficiency and anatomic fit. Actify 3D complements the Excelsius Flexrobot with the TKA total knee Arthroplasty application that received FDA clearance in late second-quarter 2024. Within trauma, the company launched the CAPTIVATE SOLA headless compression screw system that provides a fast and efficient solution for fracture repair, bone reconstruction, joint fusion, osteotomy and arthrodesis.
Over the past three months, shares of GMED have gained 24.3% compared with the industry’s 0.2% growth. The company is benefiting from NuVasive business integration. With its consistent focus on strategic market expansion and new product launches, we expect the stock to retain its bullish momentum in the coming days.
Concerning Factors for GMED
Like other industry players, Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. These factors are affecting the company’s operations and financial performance. The increasing geopolitical complexities across the globe, in particular, have resulted in a significant rise in raw material and freight costs for the company. In the third quarter, the company incurred a 99.8% surge in the cost of goods sold. The macroeconomic factors, along with the rising wage and raw material costs, are also leading to a significant escalation in the company’s operating expenses. SG&A expenses in the reported quarter were up 54.1% from the year-ago quarter.
Further, the presence of a large number of players made the musculoskeletal devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of more prominent players like Zimmer Biomet, Stryker, Johnson & Johnson’s DePuy, Smith & Nephew and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Boston Scientific BSX, Haemonetics HAE and ResMed RMD, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s shares have surged 58.3% in the past year. Estimates for the company’s earnings per share (EPS) have jumped 2.5% to $2.46 for 2024 and 0.4% to $2.72 for 2025 in the past 30 days. BSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average beat of 8.3%. In the last reported quarter, it posted an earnings surprise of 8.6%.
Estimates for Haemonetics’ fiscal 2025 earnings per share have jumped 0.4% to $4.59 in the past 30 days. Shares of the company have increased 4.5% in the past year compared with the industry’s growth of 26.5%. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%. In the last reported quarter, it delivered an earnings surprise of 2.75%.
Estimates for ResMed’s fiscal 2025 EPS have risen 2.2% to $9.22 in the past 30 days. Shares of the company have surged 58.8% in the past year compared with the industry’s 29.2% growth. RMD’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 6.4%. In the last reported quarter, it delivered an earnings surprise of 8.4%.
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