Reasons to Retain ZBH Stock in Your Portfolio for Now

Zimmer Biomet's ZBH growth in the third quarter of 2024 is backed by strong market share gains in key geographies. The stabilization of the global musculoskeletal market looks promising for future growth. Meanwhile, a debt-burdened balance sheet and fierce competitive pressure remain concerns for ZBH’s operations.  In the past year, this Zacks Rank #3 (Hold) company’s shares have lost 6.9% against 19.8% growth of the industry. The S&P 500 composite rose 32.4% during the same time frame.The leading musculoskeletal healthcare company has a market capitalization of $22.02 billion. Zimmer Biomet beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 1.76%.Factors Benefiting ZBH StockMarket Expansion Continues: Zimmer Biomet has been witnessing strong market share gains within the reconstructive Knees and Hips company in key geographies of late despite macroeconomic challenges. As per management, procedure growth continues successfully, aided by no meaningful impact from staffing challenges. The company is enjoying a tailwind from increased provider capacity, resulting in backlog pull-through in the recent quarters.In the third quarter of 2024, the International business exceeded sales expectations backed by strong demand in the key markets across Reconstructive Knees, Hips and the S.E.T. categories.  Although the company’s Knee business witnessed some challenges posed by the ERP system implementation, it grew 10% internationally. Further, the Oxford Partial cementless Knee launch in 2025 is expected to drive 60% share in the European market. The company has strategically grown the S.E.T. sales by at least mid-single digits in recent times. Zimmer Biomet currently expects this trend to continue toward the end of 2024 as well as in 2025 and 2026, driven by consistent market share gains of CMFT, Sports and Upper Extremities. Gradually Stabilizing Market: Despite pricing pressures, the last few quarters witnessed gradual stability in the global musculoskeletal market, with better-than-expected sales growth in certain geographies on the back of improved procedural volume. This was driven by favorable demographics and the growing utilization of musculoskeletal healthcare in emerging and under-penetrated developed markets. In the third quarter, the company saw another positive quarter of year-over-year momentum in large joints, with the global Knees, Hips and S.E.T. businesses growing 7.3%, 6% and 2.8%, respectively, at constant exchange rate.Factors Weighing on Zimmer Biomet StockCompetitive Landscape: The presence of a large number of players has made the medical devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of players like Stryker, Johnson & Johnson's DePuy, Smith & Nephew and Medtronic. Zimmer Biomet must constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share. Image Source: Zacks Investment ResearchLeveraged Capital Structure: Zimmer Biomet exited the third quarter of 2024 with cash and cash equivalents of $569 million, with a total debt value of $6.45 billion. Total debt in the reported quarter was much higher than the corresponding cash and cash equivalents,  indicating a tough solvency position. The company’s near-term-payable debt of $1.17 billion on its balance sheet, too, is higher than the present level of cash in hand. At the end of the third quarter, Zimmer Biomet's debt-to-capital was 34.3%, a moderately high level.ZBH Stock Estimate TrendThe Zacks Consensus Estimate for 2024 earnings per share (EPS) has remained unchanged at $7.99 in the past 30 days.The Zacks Consensus Estimate for 2024 revenues is pegged at $7.67 billion, suggesting a 3.7% rise from the year-ago reported number.Top MedTech StocksSome better-ranked stocks in the broader medical space are Haemonetics HAE, Globus Medical GMED and Penumbra PEN.Haemonetics has an earnings yield of 5.02% compared with the industry’s 1.18%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.39%. Its shares have risen 3.6% compared with the industry’s 19.9% growth in the past year.HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Globus Medical, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.1%. Shares of the company have rallied 81.8% compared with the industry’s 14.5% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%.Penumbra, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 3.2% compared with the industry’s 14.5% growth over the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Haemonetics Corporation (HAE): Free Stock Analysis Report Globus Medical, Inc. (GMED): Free Stock Analysis Report Zimmer Biomet Holdings, Inc. (ZBH): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks