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Zimmer Biomet: Combined Synergy Strong, Currency Bothers

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On Sep 29, 2015, we issued an updated research report on Zimmer Biomet Holdings, Inc.ZBH - a major player in the musculoskeletal industry. Following the closure of the much-awaited $14 billion mega merger between Zimmer Holdings and Biomet, the new combined company, Zimmer Biomet, reported a better-than-expected second-quarter 2015 with respect to revenues and earnings.

Zimmer Biomet has emerged as a leading innovator in the $45 billion musculoskeletal industry, thereby improving the merged entity's position in the competitive niche.

According to the company, this merger is a strategic fit and the integration planning teams are working together to ensure a seamless and efficient transition. Zimmer Biomet will provide significant benefits to patients, providers and other stakeholders in the healthcare space.

The company also believes this acquisition is perfectly in line with its strategic framework that focuses on growth, operational excellence and prudent capital allocation. Moreover, Zimmer Biomet expects enormous financial benefits from the takeover. Net synergies from the merger are anticipated to reach $350 million in pre-tax by the end of the third year post the transaction.

According to the combined major, it will invest strongly in research and development with an aim to develop and introduce cutting-edge musculoskeletal products and services. In line with this strategy, the company recently expanded the application of its patented surgical procedure - Subchondroplasty - for treating foot and ankle joints. This new announcement reflects Zimmer Biomet's efforts to bolster its footprint in the billion-dollar global sports medicine device market.

However, macroeconomic uncertainties, pricing pressure and unfavorable currency continue to impact the company's performance. According to Zimmer Biomet, the expected currency translation for 2015 also indicates little chances of a turnaround in the near future. In addition, intense competition in the orthopedic market continues to pose major threats.

The stock currently carries a Zacks Rank #3 (Hold).

Key Picks in the Sector

Some better-ranked medical products stocks are ICU Medical, Inc. ICUI , OraSure Technologies, Inc. OSUR and NuVasive, Inc. NUVA . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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ORASURE TECH (OSUR): Free Stock Analysis Report

NUVASIVE INC (NUVA): Free Stock Analysis Report

ICU MEDICAL INC (ICUI): Free Stock Analysis Report

ZIMMER BIOMET (ZBH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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