With the recent launches and strong product pipeline along with the strategic acquisitions and collaborations, Zimmer Biomet Holdings (ZBH) is on its way towards regaining its lost market share due to its focus on efficient integration after the merger of Zimmer Holdings and Biomet in 2015. Let’s take a look at the Wall Street analysts’ recommendations and target prices for the musculoskeletal device industry leader over the next year. According to the analysts’ recommendations in a Reuters survey including 28 brokerage firms, Zimmer Biomet Holdings has been given a “buy” rating by around 62% of analysts, whereas around 31% of firms provided the company a “hold” rating. Around 7% of analysts rated ZBH a “sell.”
Despite the company’s recent muted performance with organic sales declines reported in 2Q17 on account of some Biomet legacy brands’ production issues, which continue to have an impact on the company’s performance, most of the analysts recommended ZBH to be a “buy.” The company has also made downward revisions to its full-year 2017 guidance during its 1Q17 as well as 2Q17 earnings release. For more, read Why Zimmer Biomet Made Another Downward Revision to Its Fiscal 2017 Guidance.
The chart above shows the recommendation summary for Zimmer Biomet Holdings for the next 12 months. ZBH stock’s consensus 12-month target price is $135.6, which amounts to about a 17.5% return potential over its price of $115.5 on September 19, 2017.
As per the recent analysts’ recommendations, the lowest 12-month target price that has been provided to ZBH stock by any of the analysts stands at $92, whereas the highest 12-month target price on the company’s stock is $158. Thus, Wall Street estimates the highest upside of ~37% to the company’s stock in the next 12 months and the estimated lowest return potential on the stock if invested for the next 12 months stand at approximately 20%.
On August 24, 2017, Gabelli & Company initiated coverage on ZBH stock with a “buy” rating. Goldman Sachs has a “sell” rating on the stock.
Peers Johnson & Johnson (JNJ), Medtronic (MDT), and Stryker (SYK) have average broker target prices of ~$136.9, $91.1, and $152.1, respectively. These target prices represent potential returns of 1.2%, 12.2%, and 6.3%, respectively, over the next one year.
Investors can consider investing in the Health Care Select Sector SPDR ETF (XLV) to diversify the company-specific risks while gaining an industry-focused exposure to ZBH stock. XLV has around 0.75% of its total holdings in ZBH stock.