If Zimmer Biomet Has Turned The Corner In Major Joints, More Beat-And-Raises Could Be Coming

Credit where due – Zimmer Biomet’s (ZBH) management gave more than a few indications during the quarter that business was recovering at a faster than expected pace, but few listened (Morgan Stanley’s David Lewis and Goldman’s Amit Hazan were notable exceptions). Although revenue was still down sharply due to COVID-19 restrictions and lockdowns, Zimmer thumped expectations with stronger results across the board and some actual share gains in major joints.

The biggest question I have is whether this was a one-quarter fluke or whether the first quarter of major joint outperformance since 2015 is a sign of things to come. I freely admit I have been skeptical about Zimmer’s competitive position vis a vis Johnson & Johnson (JNJ) and Stryker (SYK), and the shares have been stronger than I expected since my last update, beating most of its comps by a pretty decent margin. The valuation still leaves some room for a decent upside, but expectations are certainly going to be more demanding in the second half of the year.

 

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If Zimmer Biomet Has Turned The Corner In Major Joints, More Beat-And-Raises Could Be Coming