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On Tuesday, TD Cowen analysts adjusted their outlook on Zimmer Biomet (NYSE:ZBH), a medical device company, by reducing the price target from $119.00 to $104.00 while maintaining a Hold rating on the stock. The revision follows Zimmer Biomet’s first-quarter results and commentary on future guidance and tariff uncertainties. The stock, currently trading at $90.79, has fallen nearly 12% in the past week and appears undervalued according to InvestingPro analysis, which shows strong fundamentals with a GOOD financial health score.
Zimmer Biomet’s first-quarter performance was overshadowed by its guidance for the year 2025 and comments on the potential impact of tariffs. Despite maintaining impressive gross margins of 71.27% and organic growth guidance at 3-5%, the expectation of a sequential decline in the second quarter and the need for a strong performance in the latter half of the year seem to have unsettled investors, as reflected in the stock’s performance on the day of the announcement. InvestingPro data reveals 7 analysts have recently revised their earnings estimates downward, suggesting widespread concern about near-term performance.
The company’s lack of specific details regarding the possible effects of tariffs in 2026 further contributed to investor concern. Zimmer Biomet did not provide a quantification of the potential tariff impact and indicated that the fourth quarter run rate of 2025 should not be used as a baseline assumption for 2026. This uncertainty prompted TD Cowen to model a decrease in gross margin for 2026 until more information becomes available.
The analysts at TD Cowen have applied a multiple of 13 times the estimated earnings per share (EPS) for 2026 to arrive at the new price target of $104.00. They suggest that greater clarity on the growth drivers for the second half of 2025 and the tariff headwinds will likely be necessary for a recovery in Zimmer Biomet’s share price.
In other recent news, Zimmer Biomet’s financial updates have drawn attention from various analysts. The company reported a modest revenue outperformance, with earnings per share (EPS) exceeding consensus estimates by about 3%, though it adjusted its EPS guidance downward to $7.90-$8.10 from the previous $8.15-$8.35 range. This adjustment reflects the impact of currency fluctuations, the FNA acquisition, and potential tariffs that could reduce operating income by $60 million to $80 million. UBS maintained a Sell rating with a $105 target, while Morgan Stanley (NYSE:MS) reduced its price target to $95, noting underperformance in the U.S. Knee business and potential future tariff impacts.
Stifel also lowered its target to $115, citing tariff concerns, although it maintained a Buy rating due to strong first-quarter performance. Raymond (NSE:RYMD) James adjusted its target to $104, highlighting the Paragon 28 acquisition’s positive impact on the company’s SET segment. Evercore ISI revised its target to $102, emphasizing a 2.3% organic revenue beat, driven by strong growth in the SET category, despite challenges in the U.S. Knees market. Zimmer Biomet reiterated its full-year 2025 guidance, anticipating 3-5% organic revenue growth and a neutral to slightly positive foreign exchange impact. The company expects tariff-related headwinds of $60-$80 million in the second half of 2025, with significant impacts anticipated in the fourth quarter.
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