Analyzing Zimmer Biomet Holdings’ Financial Guidance for 2016


Jan. 6 2017, Updated 12:35 p.m. ET

2016 sales guidance

Zimmer Biomet Holdings (ZBH) revised its 2016 guidance after reporting its 3Q16 earnings on October 31, 2016. The company’s sales guidance for fiscal 2016 is estimated to be $7.63 billion–$7.65 billion. The company expects foreign currency translation to fall by ~30 basis points. It’s lower than the previous estimates of 50 basis points. The change in estimates is due to the stronger yen against the US dollar and a stabilized euro.

Fiscal 2016 revenue growth is expected to be 1.7%–1.9% on a constant currency adjusted pro forma basis excluding the impact of the acquisition of LDR. The revised estimates are lower than the previous guidance range of 2.5%–3%.

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In 4Q16, reported organic growth is expected to be $1.96 billion–$1.98 billion. It represents constant currency YoY (year-over-year) revenue growth of ~3.3%–4.3%. Excluding the LDR contribution, Zimmer Biomet’s 4Q16 constant currency YoY revenue growth is expected to be 1%–2%. Supply chain issues related to Zimmer Biomet’s supply chain infrastructure transitioning exercise will continue to impact its top line in 4Q16.

To participate in Zimmer Biomet’s growth potential, investors can invest in the Vanguard Value ETF (VTV). VTV has ~0.18% of its holdings in Zimmer Biomet Holdings.

Earnings guidance

Zimmer Biomet Holdings updated its fiscal 2016 adjusted diluted EPS (earnings per share) guidance from $7.9–$8 to $7.9–$7.95. It represents ~15% YoY growth. In 4Q16, the company expects its fully diluted EPS to be $2.08–$2.13.

Some of Zimmer Biomet Holdings’ major competitors such as Stryker (SYK), Abbott Laboratories (ABT), and Baxter (BAX) are expected to register fiscal 2016 revenue growth of ~13.6%, 2.4%, and 2%, respectively.


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