Globus Medical GMED has experienced strong upward momentum in the past year, with its shares rising 41.8%. This has far outpaced the industry’s 7.5% decline and the S&P 500 composite’s 8.8% growth.
Currently carrying a Zacks Rank #3 (Hold), this renowned medical device company is gaining from the strong demand for its musculoskeletal solution products. The combined Globus Medical-NuVasive company is unlocking significant synergies, with more room to grow internationally. Moreover, the stock also benefits from a steady pace of new product introductions.
Headquartered in Audubon, PA, Globus Medical has an extensive portfolio comprising advanced and differentiated technologies that are used to treat a variety of musculoskeletal conditions of the spine, extremities and pelvis. The company currently has its sales operations distributed across 66 counties worldwide. Through the NuVasive Merger, it has expanded its global commercial reach, increased operational capabilities and further enhanced its comprehensive offerings of Musculoskeletal Solutions and Enabling Technologies.
Key Catalysts for GMED
The rally in the share price can be linked to the company gaining momentum in the musculoskeletal solutions market. In recent quarters, Globus Medical has outpaced the market growth in the U.S. spine business, fueled by combined product offerings, competitive rep recruiting from prior quarters and increased implant usage through robotic pull-through. In the fourth quarter of 2024, musculoskeletal sales improved 4.5% year over year, driven by strong gains in its international spine business and a 43.5% increase in global Enabling Technologies revenues.
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Furthermore, the company’s latest deal to acquire Nevro Corporation expands its footprint in the musculoskeletal space by an additional $2 billion. With its solid financial position, Globus Medical is well-positioned to accelerate investments in neuromodulation to expand both its current product lineup and future innovations. Moreover, the merger with NuVasive, completed in September 2023, has transformed the company into a global musculoskeletal powerhouse focused on rapid innovation, addressing unmet clinical needs, and improving offerings to surgeons and patients.
At the end of the fourth quarter, the combined company surpassed 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 the external vendors and utilizing its existing product offerings to drive cross-selling. Even so, Globus Medical sees major untapped potential in its combined product offerings internationally, expecting it to be a significant tailwind in 2025 and beyond.
Furthermore, product launches have rapidly accelerated following the NuVasive integration. In 2024, the company launched 18 new products, including the ExcelsiusHub and the ExcelsiusFlex surgical navigation system. Globus Medical’s high R&D spending trend is indicative of a healthy pipeline, with a range of new products in various stages of development.
GMED’s Concerns
Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. In particular, the increasing geopolitical complexities are driving up the raw material and freight costs for the company, restricting its profitability.
A Glance at GMED’s Estimates
The Zacks Consensus Estimate for Globus Medical’s 2025 and 2026 earnings per share (EPS) is expected to increase 13.5% and 15.1% year over year, respectively, to $3.45 and $3.97. In the past 30 days, the Zacks Consensus Estimate for the company's 2025 EPS has dropped by 2 cents.
Revenues for 2025 are projected to grow 6.5% to $2.68 billion, while the same for 2026 is expected to reach $2.87 billion, reflecting a 7% increase.
Key MedTech Stocks
Some better-ranked stocks in the broader medical space are Veracyte VCYT, Hims & Hers Health HIMS and Boston Scientific BSX.
Veracyte has an earnings yield of 3.6% against the industry’s -3.3% 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 gained 47.4% against the industry’s 7.6% decline 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.
Hims & Hers Health, carrying a Zacks Rank #2 at present, has an earnings yield of 1.9% against the industry’s -7.6%. Shares of the company have gained 97% against the industry’s 12.4% decline. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 40.4%.
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 50.3% compared with the industry’s 10.2% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.
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This article originally published on Zacks Investment Research (zacks.com).
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