On Thursday, Citi reiterated its Neutral rating on Zimmer Biomet (NYSE:ZBH) with a steady price target of $134.00. The firm's analyst highlighted Zimmer Biomet's first-ever analyst meeting, where management presented a Long Range Plan (LRP) for 2024-2027.
The plan includes achieving a mid-single-digit compound annual growth rate (CAGR) in revenue, growing earnings per share (EPS) at 1.5 times the rate of revenue, and increasing free cash flow (FCF) at least 100 basis points faster than EPS.
The company aims to outpace market growth in its Knees, Hips, and SET (Surgical, Sports Medicine, Foot and Ankle, Extremities, and Trauma) segments. Specifically, Zimmer Biomet targets growth for Knees at 100-150 basis points above the market, for Hips at 50-100 basis points above, and for SET at an ambitious 200-400 basis points above the market.
The analyst meeting focused on the company's journey to its current position and the strategies laid out to advance its future. The underlying message conveyed was that Zimmer Biomet is transforming, with a clear vision for growth. Citi's analyst noted that while the company's direction is well-defined, successful management execution will be key to achieving these goals.
InvestingPro Insights
Zimmer Biomet (NYSE:ZBH) is navigating a transformative phase with strategic goals set to steer the company towards growth. Supporting this vision, an InvestingPro Tip highlights that management has been actively engaged in share buybacks, signaling confidence in the company's value proposition. Additionally, Zimmer Biomet is recognized for its consistency in dividend payments, having maintained them for 13 consecutive years, a testament to its financial resilience.
From a valuation standpoint, Zimmer Biomet is currently trading at a P/E ratio of 24.75, with an adjusted P/E ratio for the last twelve months as of Q1 2023 standing at 19.74, indicating a lower valuation relative to near-term earnings growth. The company's PEG ratio during the same period is notably low at 0.21, suggesting that Zimmer Biomet's stock price may not fully reflect its earnings growth potential. Moreover, the company has demonstrated a solid gross profit margin of 71.88% over the last twelve months as of Q1 2023, underpinning its ability to manage costs effectively.
For readers interested in deeper analysis and additional insights, there are more InvestingPro Tips available for Zimmer Biomet. These can be accessed through the InvestingPro platform, where you can also utilize the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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