Leading orthopedic medical device company Zimmer Holdings, Inc. ZMH continues to introduce new products as part of its global restructuring program. Forging ahead with its plans, the company recently came up with XtraFix External Fixation System, an external fixation system for trauma patients.
This modular system is available in small (6mm) and large (11mm) sizes, assimilating key features of various systems, leading to time saving and greater flexibility.
In the last reported quarter, Zimmer’s sales from the trauma business grew 3.7% year over year. However, while the company witnessed balanced sales growth in international markets with Europe, Middle East and Africa, and the Asia Pacific region recording a respective of 11.7% and 5.7% rise, while in the U.S. it declined 1.7% year over year.
In order to offset this weakness, in 2015 and beyond, Zimmer intends to focus on its U.S. part of trauma business, while continuing to expand foothold in key global markets. We expect the recent launch of XtraFix External Fixation System to deliver promising results in this respect. The company also released the Distal Radius Plating System recently, which is expected to bring in encouraging results as well.
In order to streamline its business, Zimmer is continuing with its global restructuring program. The scheduled releases of a number of new products are likely to drive the top line going forward. After several quarters of facing challenging market conditions in the form of reduced procedure volume and pricing pressure, the company is gradually witnessing stability in the global musculoskeletal market with better-than-expected sales growth in certain geographies.
Also, according to Zimmer, the successful completion of the grand $13.35 billion acquisition of Biomet, which is expected to close in Apr 2015, will benefit healthcare investors as the merged entity will successfully advance innovation and help create a more diversified and predictable revenue mix consistent with the company’s comprehensive portfolio.
On the flip side, intense competition in the orthopedic market and pricing pressure remain key areas of concern. Also, macroeconomic uncertainties and unfavorable currency impacted sales in the reported quarter.
The stock currently carries a Zacks Rank #3 (Hold).
Key Picks in the Sector
Better-ranked medical products stocks are Cardiovascular Systems Inc. CSII, Abaxis, Inc. ABAX and Hospira Inc. HSP. All the three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment