Stifel maintains Buy rating and $94 target on Globus Medical stock

On Tuesday, Stifel analysts maintained a Buy rating and a $94.00 price target for Globus Medical (NYSE:GMED) shares, focusing on the company’s merger guidance and potential earnings per share (EPS) accretion. Currently trading at $72.14, the stock sits below analysts’ consensus target range of $82-$115. According to InvestingPro data, GMED shows strong financial health with an overall score of 3.17 out of 4, suggesting solid fundamentals despite recent market fluctuations. The analysts have developed a pro forma model to evaluate the requirements for Globus Medical to achieve its second-year EPS accretion guidance following its merger.

The pro forma model suggests that even with substantial upfront revenue dis-synergies, estimated at approximately 10% of NVRO’s projected 2025 revenues and 5% in aggregate through 2027, Globus Medical could reach EPS neutrality or accretion with minimal revenue growth from NVRO. The company’s strong financial position is evident in its impressive 67.5% gross profit margin and robust revenue growth of 60.6% over the last twelve months. Get deeper insights into GMED’s financial metrics and access comprehensive analysis with a InvestingPro subscription, which includes over 10 additional ProTips and detailed valuation metrics. This scenario would necessitate Globus Medical to achieve cost reductions in the range of $100-150 million across general and administrative expenses, research and development, cost of goods sold, and sales and marketing. The analysis by Stifel indicates that these levels of synergies are plausible, referencing recent transactions such as the NUVA deal as a benchmark for reasonable cost-saving expectations.

The Stifel note also points out that while their pro forma model indicates a slight EPS accretion of $0.01 by the second year, NVRO is projected to continue posing a modest revenue growth challenge for Globus Medical through 2027. Nonetheless, the analysts have updated their 2025 revenue cadence for Globus Medical, reducing the first quarter projections but maintaining the full-year forecast without significant alterations. This adjustment is in response to public statements from Globus Medical indicating that seasonality was not adequately reflected in the initial first-quarter projections by Stifel and the consensus.

The reiteration of the Buy rating and the $94.00 price target by Stifel reflects a careful assessment of Globus Medical’s guidance post-merger and the anticipated financial performance. The analysis serves as a framework for investors to gauge the efforts required for the medical device company to meet its EPS accretion targets in the coming years. With a healthy current ratio of 2.54 and moderate debt levels, GMED appears well-positioned to execute its merger strategy. Discover more detailed insights and access the comprehensive Pro Research Report, available exclusively on InvestingPro.

In other recent news, Globus Medical reported its fourth-quarter results for fiscal year 2024, exceeding Wall Street expectations with revenue of $657.3 million, a 6.6% increase year-over-year, and an earnings per share (EPS) of $0.84, surpassing the forecast of $0.74. The company’s Musculoskeletal Solutions segment contributed $610.3 million, while the Enabling Technologies segment saw a significant 43.5% growth to $47.0 million. Following these results, BTIG raised its price target for Globus Medical shares to $94 and maintained a Buy rating, highlighting the company’s robust revenue growth and successful product innovations. Meanwhile, Truist Securities maintained a Hold rating with a $90 price target, expressing caution about potential margin impacts from the Nevro Corp (NYSE:NVRO) acquisition announced in February 2023. This acquisition, valued at approximately $250 million, is expected to influence Globus Medical’s 2025 financial guidance, with projected net sales reaching $2.8 billion to $2.9 billion. Additionally, Globus Medical launched two new products aimed at enhancing anterior lumbar interbody fusion surgeries, further demonstrating its commitment to innovation in spine surgery solutions. The company’s strategic initiatives and financial performance continue to draw attention from investors and analysts alike.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.