It's been a while since I've written on Globus Medical (GMED), partly due to the fact that there's only so much you can say when a story is following the path you expect - 2018 and 2019 revenue were within 1% of my model back in 2018 and the share price has tracked my concern of "valuation doesn't matter until it does", with the shares up just 5% since then, well below the returns of the S&P 500 and the wider med-tech space. If there has been a major deviation, it's been in lower margins, as the company has chosen to invest more in R&D and quite a bit more in SG&A to grow the business.
On the back of a strong second quarter relative to expectations and peers, it seems as though pull-through from the Excelsius robot is really starting to make a difference, and the company's willingness (and ability) to invest in growth throughout these challenging times should serve the company well over the longer term. Unfortunately, my perennial concern, valuation, remains very much relevant, as the shares already trade above what I believe the growth, margins, and cash flow can support.
Read more here:
Valuation, Not Execution, Remains The Main Challenge With Globus Medical
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