Zimmer Biomet Is In Position To Ramp Up Revenue Growth

Following the upbeat 2016 guidance issued by Zimmer Biomet Holdings Inc ZBH, Argus’ David Toung believes the company has completed its merger integration process and the combined sales force has stabilized.

Toung reiterated a Buy rating on the company, with a price target of $140.

Growth & Stability

“The combined company is driving sales growth through new product launches and benefiting from greater stability in the volume of surgical procedures,” the analyst mentioned, while adding that the stock valuation was very attractive, “given the strength of the combined company.”

Following the Q2 results and management comments at the September investor conference, Toung believes Zimmer Biomet is now in a stronger position to accelerate top line growth.

Positives

“Another positive sign is that the company’s U.S. market share for hip and knee implants appears to have stabilized after several quarters of declines, according to data from Symphony Health Solutions and analysis by Bloomberg Intelligence,” the analyst stated.

Along with the relatively long post-merger integration process, Zimmer and Biomet also needed to combine their sales forces and integrate their commercial sales channels.

According to the Argus report, “At a September investor conference, management indicated that sales growth would now improve as the company had largely completed the integration process.”

The adjusted EPS estimates for 2016 and 2018 have been raised to reflect the robust Q2 sales growth and the updated guidance.

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