Zimmer Biomet Earnings: Muted Large Joint Growth Keeps Our 2024 Projections Tempered

Zimmer Biomet posted fourth-quarter and full-year results that ran slightly ahead of our expectations on the top and bottom lines, but not enough to materially shift our fair value estimate. Additionally, we continue to hold tempered expectations for 2024, which fall slightly short of management’s outlook, as we expect utilization of the Rosa robot and penetration of the higher-margin cementless knees are unlikely to make a quantum leap this year but instead to increase steadily and more gradually over time. However, market skepticism about whether Zimmer Biomet can reach management’s 2024 goals seems to have translated into pressure on shares. Nonetheless, we saw little in the quarter to change our thinking on Zimmer Biomet’s wide economic moat.