Zimmer Biomet Holdings, Inc.
ZBH
is expected to report second-quarter 2022 results on Aug 2, before market open.
In the last reported quarter, the company’s earnings of $1.61 exceeded the Zacks Consensus Estimate by 15%. Over the trailing four quarters, its earnings outperformed the consensus estimate on three occasions and missed once, the average beat being 5.3%. Let’s take a look at how things have shaped up prior to this announcement.
Factors at Play
Zimmer Biomet is expected to have witnessed a strong recovery in its legacy business in the second quarter despite the spread of the new COVID wave, primarily driven by the continued opening up of the economy. Over the second-quarter months, it was observed that even when new COVID variants continued to spread globally, people kept opting for non-COVID elective orthopedic and musculoskeletal procedures.
However, the company might have faced upheaval in business, thanks to the global inflationary situation in terms of mounting labor and raw material costs, severe staffing shortages and supply issues, which might have impacted ZBH’s bottom line in the second quarter.
Further, Zimmer Biomet, which has a broad business base in China, is expected to have come under pressure due to the lingering COVID-led lockdowns and limited trade. Further, the implementation of the volume-based procurement (VBP) program brought down China orthopedic device prices, which might have otherwise impacted ZBH’s business in this region.
Zimmer Biomet Holdings, Inc. Price and EPS Surprise
Zimmer Biomet Holdings, Inc. price-eps-surprise
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Zimmer Biomet Holdings, Inc. Quote
On a positive note, priority areas like the
S.E.T.
business (comprising Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma) are expected to have put up a better second-quarter performance compared with 2021, fueled by ramped-up investment in R&D and commercial infrastructure.
We expect this arm to deliver strong results on the back of the company’s focus on sports and extremities, especially upper extremities, trauma and Craniomaxillofacial and Thoracic (CMFT). Zimmer Biomet is likely to have gained from its increasing presence in the field of Ambulatory Surgery Centers.
We expect the company to have witnessed strength in its performances within its
Hips
and
Knees
product portfolios in the United States, which is better equipped for pandemic support compared to the non-U.S. markets of Zimmer Biomet. The nature of the business, which is non-elective, might have registered year-over-year growth in the second quarter.
The robust performance of Avenir Complete is likely to have continued during the second quarter, thus driving the Hip business. Also, strong demand for ROSA Knee, along with strong momentum for Persona Revision, is likely to have continued through the to-be-reported quarter. In this regard, the company earlier this year noted that one of the fastest-growing subcategories of hip is the direct anterior approach. Both the recently-launched Avenir Complete and ROSA applications target that fast-growth submarket.
Q2 Estimates
The Zacks Consensus Estimate for second-quarter 2022 revenues is pegged at $1.72 billion, suggesting a 15.1% drop from the year-ago reported figure.
The Zacks Consensus Estimate for the company’s second-quarter 2022 earnings per share of $1.64 indicates a 13.7% decline from the year-ago adjusted earnings.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive
Earnings ESP
has a higher chance of beating estimates. This is not the case here as you can see:
Earnings ESP
: Zimmer Biomet has an Earnings ESP of -2.44%. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Zacks Rank
: The company currently carries a Zacks Rank #4 (Sell).
We note that the second-quarter estimates are showing a sharp year-over-year decline. As the second-quarter projection itself has become conservative, there are higher chances that the company will beat estimates for this quarter.
Stocks Worth a Look
BrainsWay Ltd.
BWAY
has an Earnings ESP of +33.33% and a Zacks Rank of 2. You can see
the complete list of today’s Zacks #1 Rank stocks here.
BrainsWay’s 2023 earnings growth rate is estimated to be 16.7%. BWAY’s 2023 revenues are expected to growth 17.1% from 2022.
Alcon Inc.
ALC
has an Earnings ESP of +5.07% and a Zacks Rank of #2.
Alcon long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.41% compares favorably with the industry’s (8.09%).
QuidelOrtho Corporation
QDEL
currently has an Earnings ESP of +9.17% and a Zacks Rank of #2.
QDEL’s earnings yield of 14.83% compares favorably with the industry’s (-2.63%).
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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