Market Overview

Globus Medical Stands On The Brink Of Inflection; Leerink Upgrades

Share:

Considering Globus Medical Inc (NYSE: GMED) on the verge of significant revenue growth acceleration, Leerink Swann upgraded the musculoskeletal medical device company to Outperform and increased its price target from $29 to $40.

The firm has been anticipating the ratings change since it downgraded Globus Medical in July.

“We had been of the mindset there would eventually be an organic growth acceleration pick-up later in 2017 and that the company would likely be worth re-visiting in mid-2017,” analysts Richard Newitter and Ravi Misra wrote in a note.

Now, Globus Medical is nearing its predicted inflection point, and Leerink foresees a shift from negative to positive growth in the first half of 2017. Additionally, it expects about 14 percent year-over-year revenue growth through the second quarter of 2018.

Source Of Strength

The company is expected to gain momentum from four factors: recent recruitment of experienced representatives, increasing profits from junior rep training programs, new product launches and new revenue from the robotics and trauma pipeline.

The latter is expected to generate $11 million in the second half of 2017 and another $35 million in 2018.

Reading The Numbers

While Globus Medical has already rebounded (nearly 43 percent) from 2016 lows and rests at an all-time high, Leerink still sees room to inch higher. Analysts noted that the present valuation doesn't well reflect sales growth acceleration and above-average profitability.

Because Globus Medical’s stock and multiple valuation are strongly correlated with periods of re-accelerated growth, it appears that the company’s multiple could expand from a discount to a premium.

“We expect GMED is about to generate its strongest growth rebound yet over the next 12 to 14 months,” Newitter and Misra wrote.

Risks to the thesis include a slowdown in the spine market and a delay in the company’s robotics and trauma pipeline.

Globus Medical was trading up 3 percent at $30.71 at time of publication.

Latest Ratings for GMED

DateFirmActionFromTo
May 2020UBSMaintainsBuy
May 2020Credit SuisseMaintainsOutperform
May 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for GMED
View the Latest Analyst Ratings

 

Related Articles (GMED)

View Comments and Join the Discussion!

Posted-In: Leerink Swann Medtech Ravi Misra Richard NewitterAnalyst Color Upgrades Price Target Analyst Ratings

Latest Ratings

StockFirmActionPT
VECOOppenheimerInitiates Coverage On18.0
NVAXJP MorganUpgrades46.0
ARYAChardan CapitalInitiates Coverage On28.0
AMCImperial CapitalMaintains4.0
YETIKeyBancMaintains38.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com