ZBH - Embedded Expectations Analysis - 2021 02 24
Zimmer Biomet Holdings, Inc. (ZBH:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 20.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about business reinvestment, knee business revenue growth, and the progress of their business restructuringSpecifically, management may lack confidence in their ability to meet their 2023 margin guidance while reinvesting in growth, focus on expanding in fast-growing submarkets, and execute their extremities business strategy. Furthermore, they may have concerns about the progress of their long-term reorganization and business growth strategy, the impact of COVID-19 surges on elective procedures, and the global economy's pace of recovery. Moreover, management may lack confidence in their ability to grow their knee business through new product launches, expand ROSA's customer base, and increase the adoption of surgical robotics solutions. They may also be exaggerating the accuracy and capabilities of their robotics products, the strength of their relationships with surgeons, and the growth opportunities for the S.E.T. business in the U.S.
Zimmer Biomet Holdings is engaged in musculoskeletal healthcare. The company's products are: Knees, which includes knee replacement surgeries; Hips, which includes hip replacement surgeries; S.E.T., which includes surgical, sports medicine, biologics, foot and ankle, extremities and trauma products; Spine and Craniomaxillofacial and Thoracic, which designs, manufactures and distributes medical devices and surgical instruments, as well as provides face and skull reconstruction products; Dental, which manufactures and/or distributes dental reconstructive implants, dental prosthetic products and dental regenerative products; and Other, which includes bone cement and office based technology products.
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