Results: Zimmer Biomet Holdings, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
A week ago, Zimmer Biomet Holdings, Inc. (NYSE:ZBH) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 13% higher than the analysts had forecast, at US$1.9b, while EPS were US$1.16 beating analyst models by 445%. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Zimmer Biomet Holdings after the latest results.
Check out our latest analysis for Zimmer Biomet Holdings
Following the latest results, Zimmer Biomet Holdings’ 28 analysts are now forecasting revenues of US$8.09b in 2021. This would be a notable 15% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Zimmer Biomet Holdings forecast to report a statutory profit of US$5.22 per share. Before this earnings report, the analysts had been forecasting revenues of US$8.10b and earnings per share (EPS) of US$5.33 in 2021. So it looks like there’s been a small decline in overall sentiment after the recent results – there’s been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$157, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Zimmer Biomet Holdings at US$175 per share, while the most bearish prices it at US$106. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zimmer Biomet Holdings’ past performance and to peers in the same industry. It’s clear from the latest estimates that Zimmer Biomet Holdings’ rate of growth is expected to accelerate meaningfully, with the forecast 15% revenue growth noticeably faster than its historical growth of 3.0%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zimmer Biomet Holdings to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zimmer Biomet Holdings. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$157, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Zimmer Biomet Holdings analysts – going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we’ve spotted with Zimmer Biomet Holdings .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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