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Strength Seen in Zimmer (ZBH): Can Its 4.7% Jump Turn into More Strength?

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Zimmer Biomet (ZBH) shares rallied 4.7% in the last trading session to close at $147.68. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.8% loss over the past four weeks.

The stock scored a strong price increase driven by the optimism surrounding the company’s solid second-quarter 2021 results. Earnings per share exceeded the Zacks Consensus Estimate by 3.3% while revenues surpassed the estimate mark by 2.3%. The bullish full-year 2021 revenue guidance also raises investors’ confidence. For the full year, Zimmer Biomet expects revenue growth in the range of 14% to 17% over 2020. Recently, Zimmer Biomet announced “ZimVie” as the name for the planned spin-off company for the Spine and Dental businesses. Further, the FDA 510(k) clearance of the ROSA Hip System for robotically-assisted direct anterior total hip replacement favors the stock.

Price and Consensus

Price Consensus Chart for ZBH
Price Consensus Chart for ZBH

This orthopedic device maker is expected to post quarterly earnings of $1.81 per share in its upcoming report, which represents no change from the year-ago quarter. Revenues are expected to be $1.99 billion, up 3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Zimmer, the consensus EPS estimate for the quarter has been revised 0.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on ZBH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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