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On Tuesday, Bernstein SocGen Group adjusted its financial outlook for Zimmer Biomet (NYSE:ZBH), a leading medical device company. Analyst Lee Hambright revised the price target downward to $100 from $105, while maintaining a Market Perform rating on the company’s shares. The reassessment follows Zimmer Biomet’s recent financial report, which, despite showing growth, raised some concerns among investors and analysts. The stock has declined nearly 12% in the past week, now trading near its 52-week low of $89.92. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model, with 7 analysts recently revising their earnings expectations downward.
Zimmer Biomet reported a modestly successful first quarter, with sales reaching $1.91 billion, a 2.3% growth on a constant currency basis. This figure slightly exceeded Wall Street’s expectations by $14 million, or 0.7%. Notably, the company achieved positive pricing for the fifth consecutive quarter, with a 10 basis point improvement. Adjusted earnings per share (EPS) stood at $1.81, surpassing the consensus by 2.5%. The company maintains strong fundamentals with a healthy current ratio of 2.44 and has consistently paid dividends for 14 consecutive years. InvestingPro subscribers can access 8 additional key insights about Zimmer Biomet’s financial health and market position.
Despite these positive indicators, Hambright noted apprehensions regarding the company’s outlook for the second half of the year, a sales reorganization, and the potential impact of tariffs. The analyst’s revised price target reflects a decrease in the price-to-earnings (P/E) multiple from 12.0x to 11.5x. This change is attributed to the perceived risks associated with the sales force reorganization disrupting operations. The company maintains a solid gross profit margin of 71.3% and generated $1.24 billion in levered free cash flow over the last twelve months.
The forward earnings projection for Zimmer Biomet was also adjusted in Hambright’s updated model. The analyst now expects the company’s forward Q5-Q8 EPS to be $8.66, a slight decrease from the previous estimate of $8.79. This update is part of a comprehensive review that includes a mid-2019 upgrade, a detailed outlook for 2024, and a recap of the fourth quarter of 2024.
Investors and interested parties can look to Bernstein SocGen Group’s published reports for further insights into Zimmer Biomet’s performance and the rationale behind the updated financial model and price target. The company’s stock performance will continue to be monitored in light of these developments and the broader market conditions.
In other recent news, Zimmer Biomet has experienced multiple updates regarding its financial outlook and stock ratings. The company reported first-quarter results that slightly exceeded expectations, yet faced challenges due to uncertainties about potential tariffs in 2026. Zimmer Biomet’s earnings per share (EPS) guidance was adjusted downward, now ranging from $7.90 to $8.10, influenced by currency fluctuations, the FNA acquisition, and potential new tariff proposals. Analysts from firms like TD Cowen, UBS, Morgan Stanley (NYSE:MS), Stifel, and Raymond (NSE:RYMD) James have revised their price targets, with some maintaining a hold or sell rating, while others retain a buy or outperform rating. For instance, Morgan Stanley lowered its price target to $95, citing underperformance in the U.S. Knee business, while Stifel reduced its target to $115, highlighting concerns over tariff impacts. Meanwhile, UBS maintained its sell rating with a $105 target, emphasizing cautiousness about the company’s market share gains despite modest revenue outperformance. Additionally, Raymond James revised its price target to $104, acknowledging the company’s commitment to organic growth and recent acquisitions. These developments reflect ongoing investor concerns about Zimmer Biomet’s future performance amidst tariff uncertainties and market dynamics.
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