Raymond James cuts Zimmer Biomet price target to $104 from $119

On Tuesday, Raymond (NSE:RYMD) James analyst Jayson Bedford revised the price target for Zimmer Biomet shares (NYSE:ZBH) to $104.00, down from the previous target of $119.00, while maintaining an Outperform rating on the stock. The medical device maker, currently trading at $90.48 with a market capitalization of $17.9 billion, has seen its shares approach the 52-week low of $89.92. According to InvestingPro data, the stock’s RSI suggests oversold territory, potentially presenting an opportunity for value investors. Bedford’s assessment came after Zimmer Biomet’s first-quarter results, which slightly exceeded expectations. However, uncertainties regarding potential tariffs in 2026 and timing shifts necessitating a more significant performance improvement in the second half of 2025 have affected investor sentiment.

Bedford noted the closure of the Paragon 28 acquisition, which he believes strengthens Zimmer Biomet’s Surgical, Sports Medicine, Extremities, and Trauma (SET) segment. This transaction is considered a primary factor in the updated earnings per share (EPS) guidance for 2025, with an expected 3% impact on EPS. InvestingPro analysis shows the company maintains strong financial health with a "GOOD" overall score, supported by liquid assets exceeding short-term obligations and consistent dividend payments for 14 consecutive years. Despite challenges, Bedford highlighted the company’s reaffirmed commitment to achieving 3-5% organic growth in 2025, which factors in stable pricing and a slight negative impact from fewer selling days.

Zimmer Biomet is focusing on improving its U.S. Knees business, which includes enhancing senior leadership and anticipating a pickup in the second half of 2025 due to new product introductions. While Bedford expressed a preference for greater clarity on the potential tariff impacts in 2026, he also pointed out the company’s underlying growth drivers and the current discounted multiple of 11 times the estimated 2026 earnings, which supports the Outperform rating.

The company’s 2025 guidance has been reaffirmed, taking into account various elements such as foreign exchange fluctuations, the integration of Paragon 28, and potential tariffs. The foreign exchange impact has shifted from a 1.5-2.0% headwind to a neutral or slightly positive factor, according to management’s updated outlook. With revenue growth of 3.3% over the last twelve months and current InvestingPro Fair Value calculations suggesting undervaluation, investors seeking detailed analysis can access the comprehensive Pro Research Report, available exclusively to subscribers, covering this and 1,400+ other top US stocks.

In other recent news, Zimmer Biomet reported its first-quarter 2025 earnings, revealing a revenue of $1.91 billion, slightly surpassing the consensus estimate of $1.90 billion. The company’s adjusted earnings per share (EPS) came in at $1.81, exceeding the forecast of $1.77. Despite these positive results, Zimmer Biomet lowered its full-year 2025 EPS guidance to a range of $7.90 to $8.10, down from the previous projection of $8.15 to $8.35, due to the impact of its recent acquisition of Paragon 28 and anticipated tariffs. The company also updated its revenue growth guidance for 2025, projecting reported growth between 5.7% and 8.2%, an increase from the earlier estimate of 1.0% to 3.5%.

Analysts have reacted to these developments with adjustments to Zimmer Biomet’s stock price targets. Evercore ISI reduced the price target to $102, maintaining an In Line rating, while BTIG lowered its target to $117 but kept a Buy rating. Citi also revised its target down to $104, retaining a Neutral stance. The adjustments reflect concerns over the company’s EPS guidance and the potential impact of tariffs, despite the positive revenue outlook.

Zimmer Biomet’s recent acquisition of Paragon 28 is expected to contribute significantly to its revenue growth, particularly in the foot and ankle orthopedic segment. However, the integration of Paragon 28 is anticipated to dilute EPS slightly, alongside tariff headwinds projected to impact the company’s financial performance. The firm remains confident in its ability to achieve organic revenue growth of 3-5% for 2025, supported by new product launches and favorable foreign exchange conditions.

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