BTIG raises Globus Medical target to $94, maintains Buy rating

On Friday, BTIG analyst Ryan Zimmerman increased the price target for Globus Medical (NYSE:GMED) shares to $94 from the previous target of $91, while reaffirming a Buy rating on the stock. The adjustment follows the company’s fourth-quarter results for the fiscal year 2024, which showed revenue of approximately $657.3 million, marking a 6.6% year-over-year growth and a 6.9% increase on a constant currency basis. The adjusted earnings per share (EPS) were reported at $0.84, surpassing the Street’s estimates of $645.7 million in revenue and $0.75 EPS. According to InvestingPro data, Globus Medical maintains excellent financial health with an overall score of 3.2 out of 4, supported by strong liquidity with a current ratio of 2.54.

Globus Medical’s revenue by segment revealed that its Musculoskeletal Solutions brought in around $610.3 million, a 4.5% increase year-over-year, while the Enabling Technologies segment surged by 43.5% year-over-year to about $47.0 million. The majority of the revenue beat against Street expectations was attributed to the Enabling Technologies division. This performance contributes to the company’s impressive 60.62% revenue growth over the last twelve months, as reported by InvestingPro, which shows 12 additional key insights about the company’s growth potential.

The company had initially reaffirmed its fiscal year 2025 guidance at $2.66 billion to $2.69 billion, with an adjusted EPS of $3.40 to $3.50, which was in line with Street forecasts of approximately $2.67 billion in revenue and $3.44 EPS. However, following the early February announcement of the acquisition of Nevro Corp (NYSE:NVRO), which is not currently rated, the guidance was amended to a range of $2.8 billion to $2.9 billion in revenue with an adjusted EPS of $3.10 to $3.40. Management chose not to delve into detailed discussions regarding the transaction due to the pending closure but indicated the expectation of significant accretion in fiscal year 2026.

Zimmerman noted that while the primary focus was on the strategic rationale and financial impact of the Nevro acquisition, the anticipated synergies did not align with initial expectations. Instead, management sees potential for Nevro’s Spinal Cord Stimulation (SCS) technology within Globus Medical’s Enabling Technologies, additional neuromodulation, and analytics as the company expands its reach across the entire continuum of care within the spine sector. With a market capitalization of $11.46 billion and trading near its 52-week high of $94.93, detailed analysis of GMED’s valuation and growth prospects is available in the comprehensive Pro Research Report on InvestingPro, along with expert insights on the medical devices sector.

The analyst concluded that despite the attention on the transaction, Globus Medical’s financial discipline is expected to become apparent as margins improve in fiscal year 2026, driven by in-house manufacturing and strong free cash flow conversion. This financial discipline supports the view that Globus Medical’s shares have the potential for continued appreciation over time.

In other recent news, Globus Medical reported strong financial results for the fourth quarter of 2024, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $0.84, exceeding the forecasted $0.74, and reported a revenue of $657.3 million, which was above the anticipated $635.43 million. For the full year, Globus Medical’s revenue reached $2.519 billion, marking a significant growth of 60.6% compared to the previous year. The company also announced its acquisition of Nevro Corp, an all-cash transaction valued at approximately $250 million, which is expected to influence its financial guidance for 2025.

The acquisition is aimed at expanding Globus Medical’s reach in the musculoskeletal market. Analyst firms have noted the potential impact of this acquisition on future earnings, with expectations of net sales reaching between $2.8 billion and $2.9 billion post-acquisition. The company has also set a standalone revenue guidance for 2025 of $2.66 billion to $2.69 billion. Despite these positive developments, Globus Medical’s stock experienced a slight decline in aftermarket trading.

Additionally, the company’s strategic focus on innovation was highlighted by the launch of 18 new products in 2024. Analysts from firms such as Wells Fargo (NYSE:WFC) and Barclays (LON:BARC) have shown interest in the implications of the Nevro acquisition and the company’s advancements in robotic and navigation technology. Globus Medical’s executives have expressed confidence in their growth trajectory, supported by strong operational execution and successful product innovations.

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