Zimmer Biomet Holdings Inc ZBH seems to be on the verge of beginning a multiyear cycle of accelerating top-line growth, according to Canaccord Genuity.
The Analyst
Canaccord Genuity’s Kyle Rose upgraded Zimmer Biomet from Hold to Buy, while raising the price target from $137 to $167.
The Thesis
The strategic and cultural changes that Zimmer Biomet had been implementing over the past 18 months now seem to have taken hold, Rose said in the upgrade note.
He added that this was evident in the encouraging second quarter results and management’s upbeat commentary.
Rose mentioned that Zimmer Biomet’s turnaround plan was focused on resolving quality and supply issues, accelerating the pace of new product launches and improving sales force morale and execution.
He believes the company is now well-positioned “to go on the offensive” in the back half of 2019 and 2020.
Zimmer Biomet faces several opportunities to beat the current consensus estimates for 2020, the analyst said.
He expects the upside to be driven by new products in the company’s core knee, spine and SET (sports, extremities and trauma) business units.
“What’s more, while we expect management to continue to guide conservatively, we believe top-line outperformance should lead to additional leverage opportunities exiting 2020 as supply chain improvements work through the inventory channel and ZBH annualizes investments in sales and marketing,” Rose wrote in the note.
Price Action
Shares of Zimmer Biomet were up 0.63% to $140.01 at the time of publishing on Wednesday.
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