UPDATE: Credit Suisse Upgrades Zimmer Holdings Ahead of 3Q Results Report

In a report published Tuesday, Credit Suisse analyst Bruce Nudell upgraded the rating on Zimmer Holdings ZMH from Neutral to Outperform, and raised the price target from $90.00 to $100.00. In the report, Credit Suisse noted, “We lack insight into ZMH's 3Q results (reported 10/24), but given its hip/knee market leverage (70% of sales) we expect ZMH to be the main beneficiary of what we believe is likely to be accelerating knee market sales resulting from the Affordable Care Act in 2014. We estimate that the ACA could add ~1% to US knee market growth in 2014 and ~30 bps to our baseline assumption of a ~4.25% US knee unit CAGR 2013-17. ZMH has downplayed the potential benefit from the ACA to date, but we think will be in a better position to quantify the impact after coverage begins in January. We also expect ZMH to benefit from an anticipated move of OUS markets to projected long term hip/knee unit growth rates of ~4-5% (from 2% revenue growth YTD and 1% in 2012) through easing comps in Europe (following recent austerity-related weakness) and increased emerging mkts contribution (as they get bigger).” Zimmer Holdings closed on Monday at $88.32.