Yahoo Finance Here's Why You Should Retain Globus Medical (GMED) Stock Now
Globus Medical, Inc. GMED is well-poised for growth in the coming quarters, backed by the strength of its international business and the pending merger with NuVasive. The company’s recently released 2023 first-quarter results generate investors’ optimism. However, mounting expenses and a competitive landscape do not bode well for Globus Medical.
In the past year, this Zacks Rank #3 (Hold) stock has decreased 19.7% compared to the 0.1% rise of the industry and a 2.1% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $5.36 billion. Globus Medical projects a long-term estimated earnings growth rate of 12.7% compared with 13.8% of the industry. GMED’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 2.76%.
Let’s delve deeper.
Upsides
Impressive Q1 Results: Globus Medical ended the first quarter of 2023 with better-than-expected earnings and revenues. The company delivered its highest quarterly revenues with a 21% year-over-year increase at the constant currency rate (CER). Within the United States, the Spine business witnessed notable gains across its product portfolio in expandables, biologics, MIS screws, 3D printed implants and cervical offerings.
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The robust performance of Enabling Technologies continued to be driven by ongoing robotic and imaging system sales. The rapid market interest and customer demand have positioned Excelsius3D, the company’s latest addition to the Excelsius Ecosystem, as a major growth driver in 2023.
NuVasive Deal a Strategic One: On the first-quarter earnings call, the company provided an update regarding the pending merger with NuVasive. More than 99% of Globus Medical and NuVasive Class A shareholders have voted in support of the merger deal.
Post regulatory approvals and the completion of the transaction, Globus Medical expects to deliver above 20% non-GAAP EPS accretion by the completion of the first full year following deal closure.
International Business Holds Potential: In the first quarter, Globus Medical’s international revenues grew 24.7% as reported and 31.5% at CER. The growth was led by international spinal implant businesses mainly in Australia, Brazil, Poland, the United Kingdom, Spain and Germany.
Excluding Japan, the company delivered 30% CER growth in the spinal implant business. Double-digit growth was registered in most markets, with strong growth in key markets.
Downsides
Escalating Expenses: In the first quarter, SG&A expenses were up 21.5% from the year-ago quarter. The increase reflected higher personnel-related expenses, primarily driven by sales compensation, as well as higher meetings, travel and training expenses. Despite an increase in the adjusted operating profit, the adjusted operating margin contracted 55 basis points.
A Competitive Landscape: The presence of several players made the musculoskeletal device market intensely competitive. With the presence of larger players like Zimmer Biomet, Stryker, Johnson & Johnson’s DePuy, Smith & Nephew and Medtronic, Globus Medical needs to constantly introduce or acquire new products to withstand competitive pressure and maintain its market share.
Estimate Trend
Globus Medical has been witnessing a positive estimate revision trend for 2023. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up from $2.30 to $2.33 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $1.12 billion. This suggests a 9.7% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Zimmer Biomet ZBH, Penumbra PEN and Hologic, Inc. HOLX.
Zimmer Biomet has an earnings yield of 5.72% compared to the industry’s -2.31%. Zimmer Biomet’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%. Its shares have increased 6% against the industry’s 31.8% decline in the past year.
ZBH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra, sporting a Zacks Rank #1 at present, has an estimated growth rate of 64.1% for 2024. Penumbra shares have risen 114.8% compared with the industry’s 2.4% increase over the past year.
PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 109.4%.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 4.84% compared to the industry’s -7.06%. Shares of HOLX have risen 3% compared with the industry’s 0.1% growth over the past year.
Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.3%.
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Hologic, Inc. (HOLX) : Free Stock Analysis Report
Globus Medical, Inc. (GMED) : Free Stock Analysis Report
Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
Penumbra, Inc. (PEN) : Free Stock Analysis Report
