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Wednesday, BTIG analysts maintained their Buy rating on Zimmer Biomet (NYSE:ZBH) with a price target of $126.00 after the company announced its plans to acquire Paragon 28. The deal, valued at approximately $1.2 billion in enterprise value, is seen as a strategic expansion for Zimmer Biomet into the growing Foot & Ankle market, which has an estimated total addressable market of around $5 billion.
The acquisition is expected to enhance Zimmer Biomet’s Weighted Average Market Growth Rate (WAMGR) in the Foot & Ankle sector, a segment with an approximate growth rate of 7%. Paragon 28 has developed a comprehensive product portfolio, which now broadens Zimmer Biomet’s offerings in this category.
Analysts noted that the transaction aligns with Zimmer Biomet’s merger and acquisition criteria, although the company had previously sent mixed signals regarding its interest in the Foot & Ankle market, potentially surprising some investors. From a financial growth perspective, the addition of Paragon 28 is projected to contribute approximately 30 basis points to Zimmer Biomet’s top-line growth in FY25, with a similar impact expected in FY26, based on consensus estimates.
BTIG will update its financial model for Zimmer Biomet to include the impact of the Paragon 28 acquisition upon the deal’s completion. The firm’s reiteration of the Buy rating and price target reflects confidence in the strategic fit and value of the acquisition for Zimmer Biomet’s future growth. InvestingPro data reveals additional positive indicators, including a 13-year track record of consistent dividend payments and relatively low price volatility. For deeper insights into Zimmer Biomet’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Zimmer Biomet is set to acquire Paragon 28, a medical device company, for approximately $1.1 billion. This move is expected to bolster Zimmer Biomet’s orthopedic surgical devices portfolio and strengthen its fracture, trauma, and joint replacement businesses. The acquisition deal is expected to be finalized in the first half of 2025.
In analyst updates, Stifel raised Zimmer Biomet’s stock target to $138 citing a strong outlook for the company. JPMorgan also upgraded Zimmer Biomet’s stock from Neutral to Overweight, foreseeing potential for the company’s earnings multiple to expand. However, Truist Securities maintained a Hold rating due to persistent ERP issues but increased its price target from $112.00 to $117.00.
Zimmer Biomet reported a 4% increase in net sales for the third quarter, reaching $1.824 billion, and an earnings per share of $1.74. The company also repurchased approximately $600 million in shares during the same quarter. Additionally, Zimmer Biomet declared a quarterly cash dividend for Q4 2024, maintaining a 13-year track record of consistent dividend payments.
In product news, Zimmer Biomet received FDA approval for its Oxford Cementless Partial Knee system, making it the only FDA-approved cementless partial knee implant in the U.S. The company plans a nationwide launch of this product in the first quarter of 2025. These are the recent developments in Zimmer Biomet’s performance and strategy.
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