Globus Medical, Inc. GMED continues to benefit from the robust demand for its Musculoskeletal Solutions products. Following the NuVasive merger, the combined company has formed a global musculoskeletal company focused on rapid innovation, addressing unmet clinical needs, and improving offerings to surgeons and patients. Additionally, its string of product launches is highly promising to drive growth in the coming quarters. Meanwhile, headwinds from adverse macroeconomic events and intense competition remain concerns for GMED’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 38.1% against the industry’s 7.4% fall and the S&P 500 composite’s 9.1% rise.
The renowned medical device company has a market capitalization of $9.92 billion. Globus Medical has an earnings yield of 4.78%, well ahead of the industry’s -2.56% yield. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 19.9%.
Let’s delve deeper.
Upsides for GMED
Musculoskeletal Prospects Strong: Globus Medical is gaining market share in the musculoskeletal solutions space, banking on the strong performance of its implantable devices, biologics, accessories, and unique surgical instruments used in an expansive range of spinal, orthopedic and neurosurgical procedures. Over the past few quarters, this business has registered above-market growth, driven by a combined product offering, competitive rep recruiting from prior quarters and increased implant usage through robotic pull-through.
In the fourth quarter, Globus' musculoskeletal sales improved 4.5% year over year. The growth was driven primarily by strong contributions from the company’s international spine business and a 43.5% increase in global Enabling Technologies revenues. Globus is also optimistic about the recently inked deal to acquire Nevro Corporation. The acquisition of Nevro is expected to expand Globus’ reach into the musculoskeletal market, adding an additional $2 billion market space to this niche.
Zacks Investment Research
Image Source: Zacks Investment Research
NuVasive Integration Synergy High: Globus Medical merged its business with NuVasive, and the integration is progressing well. The combined company is working to bring best-in-class technologies to create a differentiated and comprehensive procedural solution offering as part of its approach to address unmet clinical needs and support surgeons and patients. Earlier, management noted that the combined company expects to generate a total of $170 million of synergies over three years as a result of this merger, with 40% being realized in year one, 70% by the end of year two and 100% in year three.
The combined company exceeded its 2024 synergy targets and was able to accelerate value creation and shareholder return as a result. For the second year’s synergies, the company is successfully implementing common systems in the international markets, expanding its in-house production for NuVasive implants, consolidating external vendors and utilizing its existing product offerings to drive cross-selling.
Steady Pace of Product Development: In line with the company’s business strategy to focus on its integrated product development, Globus Medical is consistently making efforts in research and development. Following NuVasive integration, the cadence of product launches has significantly accelerated. In the fourth quarter of 2024, the company launched five new products, including the QUARTEX MIS system that offers a percutaneous solution designed to minimize disruption in the posterior cervical and upper thoracic spine. Also, there is the ALLEGIANCE Retractor System, a ringless interior exposure system designed for quick setup, precise tissue retraction and maximum rigidity.
Globus Medical also launched the ExcelsiusFlex robotic navigation platform and the ACTIFY Unicondylar Knee System. The company currently awaits a strong cadence of product launches throughout the Musculoskeletal portfolio in the coming months of 2025. The company's high R&D spending trend is indicative of a healthy pipeline.
Downsides for GMED
Macroeconomic Concerns Curb Profits: Like other industry players, Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. These factors are adversely affecting the company’s operations and financial performance. The increasing geopolitical complexities worldwide, in particular, have led to a significant rise in raw material and freight costs for the company. In 2024, GMED incurred an 88.9% surge in the cost of goods sold.
Competitive Landscape: The presence of a large number of players made the musculoskeletal devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of more prominent players like Zimmer Biomet, Stryker, Johnson & Johnson’s DePuy, Smith & Nephew and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.
GMED Stock Estimate Trend
The Zacks Consensus Estimate for GMED’s 2025 earnings per share (EPS) has dropped 2 cents to $3.45 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $2.68 billion, suggesting a 6.5% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Veracyte VCYT, Cardinal Health CAH and Boston Scientific BSX.
Veracyte has an earnings yield of 3.2% against the industry’s -3.1% yield. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 515.9%. Its shares have risen 44.6% against the industry’s 7.3% fall in the past year.
VCYT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health, carrying a Zacks Rank #2 at present, has an earnings yield of 6.2% compared with the industry’s 6%. Shares of the company have risen 17.5% against the industry’s 4% growth. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 9.6%.
Boston Scientific, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 13.3%. Shares of the company have surged 47.1% compared with the industry’s 10% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
