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Can New Product Menu Aid Zimmer Biomet's (ZBH) Q2 Earnings?

Zacks Equity Research

Zimmer Biomet Holdings, Inc. ZBH is set to report second-quarter 2019 results on Jul 26, before the market opens.

The company delivered a positive earnings surprise of 0.54% in the last reported quarter. The metric topped the consensus mark in three of the preceding four quarters, the average beat being 1.14%.

Let’s take a look at how things are shaping up prior to this announcement.

Key Catalysts

Per Zimmer Biomet’s earlier statement, its plan for the current year is strategized, focusing on its restructuring program rather than generating a profit motive. This is a two-year effort to streamline its operations. With this move, the company is trying to leverage its position with durable weighted average market growth by 2020. This should partially get reflected through the company’s second-quarter operating results.

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Under the company’s short-term priorities areas, the company is currently shifting focus from supply stability to initiatives aimed at increasing its overall supply chain efficiency. Further, the company is making a good progress with respect to quality.

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. Price and EPS Surprise
Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Zimmer Biomet Holdings, Inc. price-eps-surprise | Zimmer Biomet Holdings, Inc. Quote

Pertaining to its product pipeline, over the past several months, Zimmer Biomet secured a number of important regulatory clearances for knee, brain and spine applications under its ROSA robotics platform. Courtesy of these back-to-back product approvals, the company became the first entity with 510(k) clearance for Brain, Spine and Knee offerings on a single robotic platform, globally. We expect to see solid top-line contributions from this product array in the upcoming second-quarter results.

By virtue of its plan’s successful execution, the company’s first-quarter results were above expectations and with additional supports, it is expected to make a further flourish in the second quarter.

Meanwhile, with Zimmer Biomet concentrating solely on its restructuring initiative, chances are slim for the company to deliver robust growth performances across its operating segments in any given quarter of 2019. The Zacks Consensus Estimate for second-quarter revenues of $1.98 billion indicates a slip of 1.29% from the year-ago reported figure. This downside also points in the same direction.

The Zacks Consensus Estimate for S.E.T. revenues of $435 million implies a 0.23% dip from the year-earlier reported number.

The Zacks Consensus Estimate for Knee revenues stands at $694 million, down from $703 million reported in the prior-year quarter.

The Zacks Consensus Estimate of $482 million for Hip revenues suggests a 1.02% decline from the year-ago reported number.

What Our Quantitative Model Suggests:

The proven Zacks model clearly shows that a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zimmer Biomet has a Zacks Rank #2, which increases the predictive power of ESP. It also has an Earnings ESP of +0.24%, together which a likely positive surprise is predicted for the stock this earnings season.

Other Stocks to Consider

Here are a few other medical stocks worth considering from the broader medical space as these too comprise the right mix of elements to exceed expectations this reporting cycle.

DENTSPLY SIRONA XRAY has an Earnings ESP of +6.95% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher Scientific Inc. TMO has an Earnings ESP of +0.54% and a Zacks Rank #3.

Stryker Corporation SYK has an Earnings ESP of +0.24% and is a Zacks #2 Ranked player.

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Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
 
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