ZBH Gears Up for Q3 Earnings: What Lies Ahead for the Stock?

Zimmer Biomet Holdings, Inc. ZBH is scheduled to report third-quarter 2024 results on Oct. 30, before market open.

In the last reported quarter, the company's earnings of $2.01 beat the Zacks Consensus Estimate by 1.5%. ZBH beat on earnings in each of the trailing four quarters, the average surprise being 2.84%.

ZBH's Q3 Estimates

The Zacks Consensus Estimate for revenues is pegged at $1.81 billion, suggesting a 3.3% rise from the year-ago reported figure.

The Zacks Consensus Estimate for earnings is pinned at $1.75 per share, indicating a 6.1% improvement from the year-ago reported numbers.

Estimate Revision Trend Ahead of ZBH's Q3 Earnings

The Zacks Consensus Estimate for earnings has moved south 1.1%  to $1.75 per share in the past 30 days.

Let's briefly look at how things might have shaped up for this MedTech major in the to-be-reported quarter.

Factors at Play

Zimmer Biomet is likely to have experienced strong growth in the third quarter on the back of strong performance from its business segments.

The Hip business is expected to have witnessed growth due to the company's comprehensive suite of solutions in navigation in direct anterior stems and surgical impactors.

While this business lagged the broader market during the second quarter due to key portfolio gaps, the company has made significant progress with new product introductions. During the same quarter, Zimmer Biomet launched the surgical impactor HAMMR, whose adoption has been great so far. Additionally, during the third-quarter, the company entered into a definitive agreement to acquire OrthoGrid Systems, Inc. The acquisition includes OrthoGrid's AI-powered, fluoroscopy-based surgical assistance platform Hip AI, as well as two additional FDA-cleared orthopedic applications and over 40 patents.

Outside the United States, ZBH expects to launch a second generation of hip posterior robotics. Banking on these developments, the company is expected to report a strong revenue increase within this category in the third quarter.

Within the Knees business, the company faced some challenges from a supply standpoint. These are high ASP cases.

Zimmer Biomet Holdings, Inc. Price and EPS Surprise

Although this business in the United States was softer than expected, the company delivered knee growth of 5% year over year in the second quarter. We expect this growth trend to have continued in the third quarter as well. 

The company expects to launch two different ROSA for knees in the coming three to eight quarters. In addition to ROSA, Zimmer Biomet has a partnership with THINK Surgical for TMINI — a miniature handheld robotic system for total knee arthroplasty. TMINI was supposed to be released in the second half of 2024. These developments might have had a positive impact on the company's third-quarter top-line performance.

In the second quarter, the S.E.T business grew mid-single digits, led by key focus areas of CMFT, upper extremities and sports growing on average high-single digits. The second quarter of 2024 was the third quarter in a row to experience such growth. Every single business within S.E.T. grew for the first time in the second quarter. We expect this trend to have continued in the third quarter as well.

What Our Model Suggests for ZBH

Per our proven model, a stock with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a higher chance of beating estimates. This is not the case here, as you can see below.

Earnings ESP: Zimmer Biomet has an Earnings ESP of -1.65%%.

Zacks Rank: The company currently carries a Zacks Rank #4 (Strong).

Stocks Worth a Look

Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this reporting cycle.

Atea Pharmaceuticals AVIR has an Earnings ESP of +13.13% and a Zacks Rank #1 at present.

The company is expected to release third-quarter 2024 results on Nov. 13. AVIR's earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 5.23%.

RadNet RDNT has an Earnings ESP of +20.00% and a Zacks Rank #2 at present. The company is expected to release third-quarter 2024 results on Nov. 13.

RDNT's earnings surpassed estimates in three of the trailing four quarters and broke even once, the average surprise being 98.23%. The Zacks Consensus Estimate for RadNet's third-quarter EPS is expected to increase 21.4% from the year-ago quarter's reported numbers.

TransMedics Group TMDX has an Earnings ESP of +26.63% and a Zacks Rank #3 at present. The company is likely to release third-quarter 2024 results on Nov. 4. The Zacks Consensus Estimate for the company's third-quarter EPS implies a surge of 333.3% from the year-ago quarter's reported figure.

To read this article on Zacks.com click here.