Zimmer Biomet Stock: Is ZBH Underperforming the Health Care Sector?

With a market cap of $18.4 billion, Zimmer Biomet Holdings, Inc. (ZBH) is a leading global medical technology company specializing in orthopedic implants and surgical solutions. The Indiana-based  company’s portfolio includes joint replacement products, trauma and sports medicine devices, spine and craniomaxillofacial technologies, and robotic surgery platforms. 

Companies worth more than $10 billion are generally labeled as “large-cap” stocks and Zimmer Biomet fits this criterion perfectly. Serving hospitals and surgeons worldwide, the company focuses on improving mobility and patient outcomes through advanced implants, digital integration, and innovative surgical systems.

Shares of the company have declined 19.4% from its 52-week high of $114.44. Over the past three months, its shares have declined 11.2%, underperforming the Health Care Select Sector SPDR Fund’s (XLV) 8.2% rise during the same period.

Longer term, ZBH stock is down 12.7% YTD, lagging XLV's 9% gain. Moreover, shares of the medical device maker have dropped 15.7% over the past 52 weeks, compared to XLV’s 3.6% rally over the same time frame.

The stock has faced intense volatility in recent months and has dipped below both its 50-day and 200-day moving averages since early November. 

On Nov. 5, Zimmer Biomet’s shares tumbled 15.2% after the company delivered mixed Q3 results. Organic sales rose 5% on a constant-currency basis, and total revenue increased 3.6% from acquisition activity, bringing net sales to 2 billion dollars, up 9.7% year over year with a 1.1% tailwind from currency. Even so, the top line fell short of consensus by 42 basis points, unsettling investors. The quarter did include a positive earnings surprise, with adjusted EPS rising 9.2% to 1.90 dollars, modestly ahead of expectations.

ZBH stock has also  lagged behind its rival, Penumbra, Inc. (PEN). PEN stock has surged 20.9% YTD and 19.2% over the past 52 weeks.

As a result, ZBH stock has a consensus rating of “Hold” from 26 analysts in coverage, and the mean price target of $102.69 represents a premium of 11.3% to current levels.