Zimmer (ZMH) declared the acquisition of Biomet for an amount of $13.52 billion and approximated double-digit increase in earnings per share. The firm also targets to be a leader in the musculoskeletal mart worth $45 billion. By achieving such, Zimmer will get the chance to reap diversity and scale advantages across global areas and product compound segments. Nonetheless, postponement of the acquirement has been set by the U.S. and Europe anti-trust regulators. Despite this, the firm is confident to obtain the approval and take regard Biomet evaluation.
Due to the second quarter slow expansion in revenue, the firm decided to set a price target of $117, which has the potency to increase by 14% from the existing value. At present, the firm is trading with $101 price, which is 15 times more than the earnings per share estimate for the fiscal year. There is also a 1% increase in revenue year over year ($1.18 billion), which is lower than the projected $1.48 billion. The earnings per share of $1.49 is closely inclined to the agreement. In general growth, Zimmer is just subsequent to second quarter performances of Stryker and Johnson & Johnson’s DePuy.
Zimmer should be indebted to its new Persona knee, which has become its primary resource during the past quarter. The solid knee returns globally have offset the weak records of its surgical, spine, dental, and hips units. However, the knee business in United States seems to be on the expected level. If Zimmer products are to be compared, the growth at 2% for the sales are noticed ($890 million), which is followed by a harm at 6% ($78.8). The downtrend for the rest of the products also became apparent. Spine business had a decline of 4% ($52 million), dental unit had 0.5% decline ($61 million), and surgical business had a downfall of 10% (more or less $100.4 million).
The spine product downtrend is observed to continue and offset may be rarely ascertained regardless of Biomet acquisition. Consumers prefer the conventional physical medications than products that still have limited studies and research information.
Zimmer is also transparent in considering the revenue expansion guidance for 2014, which may fall between 2% and 3% (a downturn to 5% from 3%). The debased generally accepted accounting principles (GAAP) earnings per share (EPS) is expected to fall between $4.65 and $4.75 (a downturn to $5.10 from $4.90).
Zimmer remains to be among top providers of health solutions for musculoskeletal system. For almost 100 years, the firm committed itself in healing joint pain and restoring mobility among people globally.