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On Thursday, B.Riley initiated coverage on ZimVie Inc. (NASDAQ:ZIMV) with a Buy rating and set a price target of $16.00, representing a 67% upside from the current price of $9.60. According to InvestingPro data, analysts maintain a moderate buy consensus with price targets ranging from $15 to $16. ZimVie, a pure-play medical device company specializing in the dental market, offers a broad range of products for tooth replacement and restoration, including dental implants, biomaterials, and digital workflow solutions with a global reach.
ZimVie, which was spun off from Zimmer Biomet in 2022, has recently sold its spine business to an affiliate of H.I.G. Capital for $375 million in 2024. This transaction valued the spine business at 0.9 times its enterprise value to last twelve months (EV/LTM) sales. Following the divestiture, ZimVie has reduced its debt by $275 million, significantly lowering its leverage ratio from 4x to 2x. The company maintains a healthy current ratio of 1.92x and receives a "GOOD" overall financial health score from InvestingPro.
The sale has also led to an improvement in the operating margin profile for ZimVie's remaining dental business, despite challenging economic conditions. The company's focus on high-margin consumables in premium markets and a robust pipeline of innovative products has been instrumental in this performance.
The management team at ZimVie has been commended for successfully improving the company's balance sheet and operating profile. Despite these achievements, ZimVie's stock currently trades at a discount compared to its industry peers. B.Riley analysts have expressed confidence in ZimVie's potential for further margin expansion, particularly when market conditions improve.
In other recent news, ZimVie Inc. reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.27, which surpassed analysts' expectations of $0.26. However, the company faced a revenue shortfall, reporting $111.5 million against a forecast of $113.4 million. Despite the EPS beat, the revenue miss may have contributed to investor concerns. ZimVie has completed a strategic transition to focus solely on dental products after divesting its spine business. The company projects 2025 revenue between $445 million and $460 million, with adjusted EPS expected to range from $0.80 to $0.95.
Additionally, ZimVie announced upcoming changes to its Board of Directors, with CEO Vafa Jamali set to become Chairman in May 2025. In another development, Needham analysts downgraded DENTSPLY SIRONA (NASDAQ:XRAY)'s stock from Buy to Hold, citing concerns over a potential slowdown in the dental market's growth. The analysts expressed skepticism about near-term growth prospects for the dental market. Overall, these recent developments reflect ongoing strategic shifts and market challenges within the dental sector.
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