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Zimmer Biomet Holdings Inc ZBH

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Zimmer Biomet Sees Slower Recovery in Large Joints During Q2; No Change to Our Fair Value Estimate

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

Zimmer Biomet reported second-quarter results that were somewhat disappointing, though we’re leaving our fair value estimate unchanged as our projections for the firm’s recovery in 2021 remain below management’s outlook. While quarterly top-line performance trailed the strength seen at rival Stryker, Zimmer Biomet still managed to keep a tight rein on costs, which puts it on track to meet our full-year projections. It’s not entirely clear to us what factors might explain these results, as the firm seems to performing well on an operational level. We’re also uncertain about management’s discussion of the unevenness of large joint replacement patients returning for treatment. It seems that this would be a category issue that would also affect Stryker. Nonetheless, we saw nothing in this quarter that would suggest Zimmer Biomet’s wide economic moat has been diminished or impaired in any way. Surgeon switching costs and Zimmer Biomet’s intangible assets haven’t appreciably changed.

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Company Profile

Business Description

Zimmer Biomet designs, manufactures, and markets orthopedic reconstructive implants, as well as supplies and surgical equipment for orthopedic surgery. With the acquisitions of Centerpulse in 2003 and Biomet in 2015, Zimmer holds the leading share of the reconstructive market in the United States, Europe, and Japan. Close to 60% of total revenue is derived from sales of large joints, another 22% comes from extremities and trauma; the remaining portion is primarily related to spine and dental products.

Contact
345 East Main Street
Warsaw, IN, 46580
T +1 574 267-6131
Sector Healthcare
Industry Medical Devices
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 20,000

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