Globus Medical stock target cut to $82 by Truist Securities

On Tuesday, Truist Securities adjusted their outlook on Globus Medical (NYSE:GMED) by lowering the price target from $90.00 to $82.00, while maintaining a Hold rating on the company’s shares. Currently trading at $72.14, the stock has shown a year-to-date decline of 12.78%, though InvestingPro data indicates the company maintains a GREAT financial health score of 3.17. The revision reflects a new revenue cadence aligned with the company’s recent communication regarding expected quarterly seasonality, resembling pre-COVID patterns.

The forecast by Truist Securities now anticipates that Globus Medical will see an average of 23.0-23.5% of its annual revenue in the first quarter, with the updated estimate for the first quarter of 2025 being $621.2 million, a decrease from the previous $646.4 million projection. This comes as the company has demonstrated strong revenue growth of 60.62% over the last twelve months, reaching $2.52 billion. The estimates for the second and third quarters of 2025 are approximately 25% of the annual revenue, with the second quarter slightly higher due to increased capital placements. The projections are $674 million for the second quarter and $668.8 million for the third quarter, the latter being an upward revision from $656 million. The fourth quarter, traditionally the strongest, is expected to contribute 26.7% of the full-year revenue, with an adjusted forecast of $715.1 million, up from $702 million.

The full-year revenue and earnings per share estimates for 2025 remain unchanged, with analysts projecting EPS of $3.52. However, the price target has been updated to around $82, based on a roughly 11.7 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple on the adjusted forecast for 2026 EBITDA of $908 million. For context, the company currently trades at an EV/EBITDA of 13.67x and a P/E ratio of 95.22x.InvestingPro analysis reveals 10+ additional key metrics and insights about Globus Medical’s valuation and financial health, available exclusively to subscribers. The comprehensive Pro Research Report offers deep-dive analysis of what really matters for informed investment decisions. This adjusted EBITDA takes into account Globus Medical’s standalone adjusted EBITDA of $953 million minus approximately $40 million of dilution related to the Nevro merger. This dilution corresponds to the roughly $0.20 earnings per share reduction management guided post-deal closure.

The reduction in the price target primarily reflects recent multiple compression in the market and among peer groups over the past few weeks since the last valuation update. The new multiple is below Globus Medical’s standalone five-year average forward multiple of approximately 15-16 times and aligns with the peer group’s average forecasted 2025 EV/EBITDA of around 12 times. With a market capitalization of $9.92 billion, the stock currently trades below its InvestingPro Fair Value, suggesting potential upside opportunity.

Truist Securities’ adjustment also considers the high single-digit top-line growth profile for the combined company, which is more consistent with the peer group average, rather than the historical premium associated with Globus Medical’s higher double-digit revenue growth prospects. Additionally, the firm accounts for risks stemming from the Nevro merger, leading to a more conservative multiple below the historical average.

In other recent news, Globus Medical reported strong financial results for the fourth quarter of 2024, with revenue reaching approximately $657.3 million, a 6.6% increase from the previous year. The company’s earnings per share (EPS) for the quarter was $0.84, surpassing analysts’ expectations of $0.74. Despite these positive results, Truist Securities maintained a Hold rating with a $90 price target, citing concerns about the recent acquisition of Nevro Corp (NYSE:NVRO). Meanwhile, BTIG raised its price target for Globus Medical to $94, maintaining a Buy rating, following the company’s robust performance and the anticipated synergies from the Nevro acquisition.

Additionally, Globus Medical has introduced new spine surgery solutions, including the COHERE™ ALIF Spacer and Modulus™ ALIF Blades, aimed at enhancing surgical efficiency. Stifel analysts reiterated a Buy rating with a $94 target, focusing on the company’s merger guidance and potential EPS accretion. They noted that Globus Medical’s strategic cost reductions could help achieve EPS neutrality or accretion in the coming years, even with anticipated revenue challenges from Nevro.

The company’s 2025 guidance reflects a revised revenue range of $2.8 billion to $2.9 billion and an adjusted EPS of $3.10 to $3.40, considering the Nevro acquisition. Analysts at BTIG highlighted the potential for Nevro’s technology to complement Globus Medical’s existing offerings, particularly in the Enabling Technologies segment, which saw a significant year-over-year revenue increase of 43.5%. These developments underscore Globus Medical’s continued focus on innovation and strategic growth in the medical device industry.

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