On Wednesday, BofA Securities updated its outlook on Globus Medical (NYSE:GMED), increasing the price target to $80 from the previous $55, while keeping an Underperform rating on the stock. The adjustment comes after Globus Medical (TASE:PMCN) reported a stronger-than-anticipated third-quarter performance, with revenues of $626 million surpassing Wall Street's expectations by 3%.
The company also experienced an acceleration in pro forma growth, posting a 5.5% increase compared to 2.5% in the previous quarter, adjusted for an additional selling day.
The firm noted that Globus Medical's earnings per share (EPS) exceeded market predictions by 28%, prompting an upward revision of the full-year guidance.
This beat is partly attributed to the early realization of some of the anticipated $170 million in cost synergies following the integration of NuVasive—a process that has been managed more effectively than initially expected.
Despite this progress, BofA Securities cautions that achieving cross-selling synergies might prove difficult, especially with new competition in the spine robot market expected this quarter.
The report underscores a conservative outlook for the fourth quarter, as implied by the company's management, despite a robust third quarter. BofA Securities suggests that capturing market growth in line with the Street's expectation of 7% could be challenging for Globus Medical.
In justifying the revised price target, BofA Securities points to better integration execution and improving profitability as reasons for applying a less discounted multiple. The new price objective is based on a 12 times multiple of the 2026 enterprise value to EBITDA (EV/EBITDA), an increase from the previous 10 times multiple of the 2025 EV/EBITDA.
Additionally, BofA Securities has raised its EPS estimates for Globus Medical to $2.93 for 2024 and $3.32 for 2025.
In other recent news, Globus Medical, Inc. demonstrated robust financial health in its Q3 results, surpassing analyst expectations and subsequently raising its full-year guidance. The company reported an impressive adjusted earnings per share of $0.83, notably higher than the consensus estimate of $0.65.
Revenue for the quarter also exceeded expectations, coming in at $625.7 million, a significant 63.1% YoY increase, outpacing analysts' projections of $604.71 million.
Globus Medical's positive adjustment to its full-year 2024 earnings per share guidance now stands at $2.90-$3.00, an increase from its previous outlook of $2.80-$2.90 and above the Wall Street consensus of $2.85. The company attributes its worldwide net sales increase to the addition of NuVasive (NASDAQ:NUVA), increased volumes of spine product sales, and enabling technology products and services.
U.S. net sales rose 60.3% YoY, while international net sales exhibited a significant jump of 74.8%. These recent developments reflect the company's enduring strength and ability to deliver on its business objectives, as stated by President and CEO, Dan Scavilla.
InvestingPro Insights
Globus Medical's recent performance and BofA Securities' updated outlook are further complemented by data from InvestingPro. The company's market capitalization stands at $10.23 billion, reflecting its significant presence in the medical devices sector. InvestingPro data shows that Globus Medical has experienced substantial growth, with a revenue increase of 103.89% over the last twelve months as of Q2 2024, aligning with the strong third-quarter performance noted in the article.
InvestingPro Tips highlight that management has been aggressively buying back shares, which could be seen as a sign of confidence in the company's future prospects. Additionally, the tip indicating that net income is expected to grow this year supports BofA Securities' decision to raise their EPS estimates for the coming years.
The company's stock is trading near its 52-week high, with a robust 62.5% price total return over the past year. This performance is consistent with the article's mention of the company's strong quarterly results and improved guidance. For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for Globus Medical, providing a deeper understanding of the company's financial health and market position.
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