Barclays upgrades ZimVie stock rating to Equalweight on Archimed merger

Investing.com - Barclays (LON:BARC) has upgraded ZimVie Inc. (NASDAQ:ZIMV) from Underweight to Equalweight and more than doubled its price target to $19.00 from $9.00 following the announcement of a merger agreement with Archimed. According to InvestingPro data, ZimVie maintains a strong financial health score of GOOD, with liquid assets exceeding short-term obligations through a healthy current ratio of 2.14.

ZimVie has entered into a merger agreement with Archimed to take the company private at $19.00 per share, representing an enterprise value of approximately $730 million. The offer price represents a 99% premium to ZimVie’s 90-day volume-weighted average price of $9.57 per share. The stock has already shown remarkable momentum, with InvestingPro data showing a 112% return over the past week, though technical indicators suggest the stock is currently in overbought territory.

The transaction values ZimVie at approximately 10.0x projected 2025 EBITDA or about 9.5x next twelve months EBITDA, according to Barclays’ analysis. The merger agreement includes a 40-day "Go-Shop Period" through August 29, 2025, during which ZimVie may solicit alternative proposals from third parties. With a robust gross profit margin of 64.83%, ZimVie demonstrates strong operational efficiency. Get access to over 12 additional key metrics and insights with InvestingPro’s comprehensive research report.

Barclays has made minor adjustments to its sales projections, reducing 2025 estimates by less than 1% in line with management guidance, with similar small reductions for 2026 and beyond. The firm has raised its EPS estimates by approximately 2% for 2025, with changes of less than 1% on average for subsequent years.

The new $19 price target is based on an 8.5x EV/EBITDA multiple on Barclays’ projected next twelve months EBITDA estimate of $77 million, representing a slight discount to the deal multiple of approximately 9.5x projected next twelve months EBITDA of $71 million.

In other recent news, ZimVie Inc. reported its first-quarter 2025 financial results, with earnings per share (EPS) of $0.27, surpassing the forecasted $0.2216. The company achieved a total revenue of $112 million, which marked a slight decrease from the previous year. However, ZimVie impressed investors with a notable 238% increase in adjusted EPS compared to the prior year. In a significant corporate development, ZimVie announced a definitive agreement to be acquired by healthcare investment firm ARCHIMED for approximately $730 million. This all-cash transaction will see ZimVie stockholders receive $19.00 per share, representing a 99% premium to the company’s 90-day volume-weighted average price. Analyst firm UBS recently adjusted its outlook on ZimVie, reducing the price target to $10.00 from $16.00, while maintaining a Neutral rating. Needham also maintained its Hold rating following ZimVie’s mixed first-quarter results, noting the company’s strength in the digital segment and modest growth in biomaterials. Despite some challenges, ZimVie’s management highlighted positive trends in implant volumes, suggesting potential future growth.

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