Zimmer Biomet Holdings Inc ZBH

Zimmer Biomet Earnings: Prior-Year Period is Challenging, but We See Progress with Cementless Knees

Zimmer Biomet posted decent first-quarter results that held few surprises, and the firm remains on track to meet our full-year expectations. As a result, we're leaving our $175 fair value estimate unchanged. Quarterly revenue grew 4% in constant currency year over year, which we view as respectable, especially considering the outsize strength that fueled the prior-year period. Quarterly adjusted operating margin closely matched our estimate for the year, and we were pleased to see pricing hold up relatively well. We saw little in the quarter to shift our thinking on Zimmer Biomet's wide economic moat and the switching costs that orthopedic surgeons face.