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On Monday, Citi updated its stance on Zimmer Biomet Holdings Inc (NYSE:), a medical device company, raising the stock price target to $134 from the previous $130, while retaining a Neutral rating on the stock. The adjustment reflects a detailed analysis of the company’s annual report and the anticipation of new product launches expected to drive growth in the second half of 2024.
Citi’s revision of Zimmer Biomet’s financial model indicates a mixed outlook for the upcoming quarters. The first quarter of 2024 estimates have been lowered, with revenue now expected to be $1.867 billion, a 4.3% increase on an ex-fx, days adjusted basis, down from the initial $1.887 billion projection. The earnings per share (EPS) forecast for the same quarter has also been reduced slightly to $1.89 from $1.91.
For the second quarter of 2024, Citi anticipates a modest reduction in revenue to $1.971 billion, up 4.6% from the prior estimate of $1.975 billion. The EPS for this period is projected to rise by 11.4% to $2.03, a slight decrease from the earlier forecast of $2.04. Conversely, the outlook for the third and fourth quarters is more optimistic.
The third-quarter revenue estimate has been increased to $1.871 billion, a 5.4% rise, with EPS expected to grow by 14% to $1.88. The fourth-quarter revenue forecast has been boosted to $2.070 billion, up 6.7%, with EPS anticipated to climb by 4.9% to $2.30.
Despite these adjustments, the full-year 2024 EPS estimate remains unchanged at $8.11, representing a 7.3% increase. The raised price target to $134 is based on a 15-16 times earnings multiple, which falls within the $131 to $140 range.
Citi’s continued Neutral rating on Zimmer Biomet suggests a balanced view on the stock amidst a constructive medical technology market environment. The firm expects the company’s performance to be bolstered by the launch of new products later in the year.
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