Stryker shares tumble despite strong Q2 results and raised guidance
Investing.com -- Shares of Zimmer Biomet Holdings (NYSE:ZBH) tumbled 10% following the company’s updated earnings guidance that fell short of analyst expectations. Despite reporting first-quarter earnings that slightly beat estimates, the medical device maker revised its full-year 2025 earnings per share (EPS) forecast downward, citing the impact of its recent acquisition and potential tariffs.
For the first quarter ended March 31, 2025, Zimmer Biomet reported net sales of $1.909 billion, marking a 1.1% increase from the previous year and a 2.3% rise on a constant currency basis. The company’s adjusted diluted EPS came in at $1.81, surpassing the consensus estimate of $1.77. However, investors were caught off guard by the company’s forward-looking guidance.
Zimmer Biomet now expects its full-year 2025 EPS to be between $7.90 and $8.10, compared to the consensus projection of $8.21. The updated guidance incorporates the acquisition of Paragon 28, which closed on April 21, 2025, and the anticipated effects of current tariff proposals. Although the company anticipates reported revenue growth of 5.7% to 8.2% for the year, or 5.7% to 7.7% on a constant currency basis, the downward revision in EPS overshadowed the sales outlook.
TD Cowen analyst Joshua Jennings commented on the results, stating, "The acquisition and tariffs drove a downward revision to EPS guidance." Jennings noted that Zimmer Biomet’s first-quarter sales outperformed estimates with ex-FX growth of 2.3%. However, the company’s U.S. Ortho growth lagged behind Stryker Corp. (NYSE:SYK), was competitive with Smith & Nephew (LON:SN) (SNN), and exceeded that of Johnson & Johnson (NYSE:JNJ). Despite the acquisition of Paragon 28, Zimmer Biomet maintains its organic growth expectations for the core business at 3.0% to 5.0% for the year.
The company’s recent highlights include the completion of the Paragon 28 acquisition, which strengthens its position in the foot and ankle orthopedic segment, and the showcase of a broad portfolio of innovations at the American Academy of Orthopaedic Surgeons annual meeting. Furthermore, Zimmer Biomet received FDA clearance for a revision knee implant component and launched a campaign with Arnold Schwarzenegger to empower people with joint pain.
Zimmer Biomet’s stock movement today reflects investor reaction to the company’s revised earnings outlook, highlighting the sensitivity of the market to future earnings potential, particularly in the face of acquisitions and macroeconomic factors such as tariffs.
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