Zimmer (ZBH) Hits 52-Week High: What's Driving the Stock?
Shares of Zimmer Biomet Holdings, Inc. ZBH reached a new 52-week high of $146.67 on Nov 18, closing the session marginally lower at $144.99. The stock has rallied 6.2% since its third-quarter earnings announcement on Nov 5.
The company’s strong third-quarter earnings results, backed by robust segmental and global revenue growth, prompted the rally.
Let us delve deeper.
The company exited the third quarter on a strong note, with better-than-expected earnings and revenue numbers. The company witnessed year-over-year improvements in revenues in the majority of its segments as well as across Europe, Middle East and Africa (EMEA), and the Asia Pacific regions, which are encouraging.
Zimmer is upbeat about continuing the recent trend in the EMEA and the Asia Pacific region on product launches and strong customer adoptions. The company expects the trend to continue in the upcoming quarters as well.
Despite rise in the cost of products sold, the company registered gross margin improvement on solid topline performance. This also buoyed investors’ optimism.
Other Growth Drivers
Recent Approvals and Product Launches: Investors seem to be upbeat about the company as it provides some top-of-the-line products in the industry. Strong adoption of its products — including Persona Revision Knee System (which was recently launched commercially), JuggerStitch meniscal repair device, The Tether for treatment of scoliosis and ROSA ONE Spine System (recently cleared for use by the FDA) — buoys optimism.
The company’s mymobility digital health platform (developed in partnership with Apple), and the flagship Persona Partial and Persona Cementless, which are among the major recent launches, instill optimism as well.
Partnership: Zimmer signed a multinational distribution agreement with Align Technology, with respect to the iTero Element family of intraoral scanners. The agreement is expected to expand Zimmer’s footprint in the global digital restorative dentistry solutions market.
Execution of Growth Plans: The company progressed well, with respect to quality remediation in the third quarter. It is currently on track to complete the detailed remediation plan on the Warsaw North campus by the end of 2019. Additionally, the company is gaining from the global rollout of the Quality Begins With Me program, which is focused on driving sustainable quality culture.
Zacks Rank & Key Picks
Currently, Zimmer carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, NuVasive, Inc NUVA and ResMed Inc RMD.
Haemonetics, currently flaunting a Zacks Rank #1 (Strong Buy), has a projected long-term earnings growth rate of 13.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NuVasive’s long-term earnings growth rate is estimated at 10.9%. The company presently has a Zacks Rank #2 (Buy).
ResMed’s long-term earnings growth rate is estimated at 12.9%. It currently carries a Zacks Rank #2.
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