Orthopedic reconstructive products manufacturer, Zimmer Biomet Holdings, Inc. ZBH is expected to report fourth-quarter 2017 financial numbers on Jan 31, before the opening bell.
Last quarter, the company’s earnings met the Zacks Consensus Estimate. However, the four-quarter trailing average beat is pegged at 2.29%. Let’s see how things are shaping up prior to this announcement.
Factors at Play
Even though Zimmer Biomet recorded a disappointing performance in the third quarter, we are impressed with the 23.9% improvement recorded by the Spine & CMF segment. Since the end of the third quarter, management has been trying to develop its spine portfolio to strengthen its market position. In the recent past, the company has been observed to focus on research and development and product launches at this segment.
Zimmer Biomet Holdings, Inc. Price and EPS Surprise
Zimmer Biomet Holdings, Inc. Price and EPS Surprise | Zimmer Biomet Holdings, Inc. Quote
Several recent spine product innovation including PrimaGen Advanced Allograft and Comprehensive Vault Reconstruction System should help boost Zimmer Biomet’s top line in the yet-to-be-reported quarter.
Further, we are optimistic about the synergies from the $13.35 billion acquisition of Biomet. The buyout bolsters the company’s presence in the $10 billion global spine market by expanding its portfolio of innovative solutions and by strengthening its hold in the fast growing cervical disc replacement market.
We are also looking forward to the company's recently achieved designation as an Indo UK Institutes of Health (IUIH) preferred orthopaedic partner. The company also reported positive update on its Investigational Device Exemption (IDE) clinical trial assessing the use of autologous concentrated bone marrow aspirate for the treatment of critical limb ischemia. We believe that these developments will raise investors’ confidence on the company.
On the flip side, due to a dismal past quarter, Zimmer Biomet is trading below the Zacks categorized Medical-Products industry in the last three months. The stock has lost 9.0%, much wider than the 2.3% decline of the broader industry. The company’s weak sales at the Knee segment also raise concern. With major headwinds like pricing pressure, stiff competition and currency exchange, we expect this gloomy scenario to continue in the times ahead.
Earnings Whispers
Our proven model does not conclusively show that Zimmer Biomet is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Zimmer Biomet’s earnings ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.79. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Zimmer Biomet’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks to Consider
Here are a few companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Stocks to Consider
Here are some companies you may consider as our model shows that they have the right combination of elements to post an earnings beat in the upcoming quarter:
Histogenics Corporation HSGX has a positive Earnings ESP of 12.77% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Blueprint Medicines Corporation BPMC has an Earnings ESP of +6.85% and a Zacks Rank #2.
Catabasis Pharmaceuticals, Inc. CATB has an Earnings ESP of +5.77% and a Zacks Rank #2.
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