Zimmer Biomet stock target cut to $102 by Evercore ISI

On Monday, Evercore ISI adjusted its financial outlook for Zimmer Biomet (NYSE:ZBH), reducing the price target on the company’s shares to $102 from $116, while maintaining an In Line rating. The medical device maker, currently trading at $90.33 and near its 52-week low, appears undervalued according to InvestingPro analysis, which has identified several positive indicators including the company’s consistent dividend payments and relatively low price volatility. The decision came after a review of Zimmer Biomet’s first-quarter performance, which showed a 2.3% organic revenue beat compared to the Street’s expectations, primarily driven by a 4.9% organic growth in the Sports, Extremities, and Trauma (SET) category. Despite lighter sales in Knees, up by 1.9% with the U.S. market underperforming, this was counterbalanced by stronger Hip sales, which increased by 2.4%.

The company’s gross margins of 71.5% surpassed the Street’s forecast by approximately 21 basis points, and operating margins were aligned with expectations. However, earnings per share (EPS) saw a decline of roughly 7%, albeit still slightly above the Street’s predictions. With a market capitalization of $17.88 billion and maintaining a GOOD financial health score according to InvestingPro’s comprehensive analysis, Zimmer Biomet demonstrates fundamental strength despite current challenges. Zimmer Biomet reiterated its full-year 2025 guidance, expecting organic revenue growth of 3-5% and flat pricing, a change from the previously anticipated decrease of 50 basis points. The impact of foreign exchange rates is now projected to be neutral to slightly positive, compared to the earlier forecast of a 150-200 basis points headwind.

The firm’s full-year 2025 EPS estimate was revised downwards by 25 cents to a range of $7.90-8.10, from the previous $8.15-8.35 range. Free cash flow (FCF) projections were also lowered to $750-850 million from the earlier $1.1-1.2 billion estimate. For the second quarter, organic growth is expected to be slightly above the first quarter, as some orders have been rescheduled to the second half of the year due to distributor timing in emerging markets. The second half of the year is anticipated to see an acceleration in growth, aided by easier comparisons to the previous year, which was affected by ERP challenges, the rescheduled orders, no impact from the number of days, and momentum from new products.

Zimmer Biomet is expected to face tariff headwinds of approximately $5 million in the second quarter, with the remaining $55-75 million to impact the second half of the year, particularly weighted towards the fourth quarter. For investors seeking deeper insights, InvestingPro offers an extensive research report on Zimmer Biomet, one of 1,400+ US stocks covered with detailed analysis, including additional ProTips and vital metrics that could help navigate these market challenges more effectively.

In other recent news, Zimmer Biomet reported its first-quarter 2025 financial results, revealing revenues of $1.909 billion, a 1.1% year-over-year increase, with an adjusted earnings per share (EPS) of $1.81. These figures slightly surpassed analyst expectations, which projected revenues of $1.895 billion and an EPS of $1.77. Despite this performance, the company revised its full-year 2025 EPS guidance downward to a range of $7.90 to $8.10, from the previous $8.15 to $8.35, due to the impact of its acquisition of Paragon 28 and anticipated tariffs. Zimmer Biomet’s updated revenue growth forecast for 2025 is now between 5.7% and 8.2%, an increase from the earlier estimate of 1.0% to 3.5%, boosted by favorable foreign exchange rates and contributions from the Paragon 28 acquisition.

Analysts have responded to these developments with mixed actions. BTIG lowered its price target for Zimmer Biomet to $117, maintaining a Buy rating, while Citi cut its price target to $104, retaining a Neutral stance. The company continues to face challenges, such as lagging performance in its Knee and Hip segments compared to competitors like Stryker (NYSE:SYK) and Johnson & Johnson. Additionally, tariffs and inventory management issues pose potential risks to its financial performance. Zimmer Biomet’s strategic focus remains on innovation and diversification, with several new product launches anticipated to drive growth in the latter half of 2025.

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