On Thursday, BTIG adjusted its outlook for Globus Medical (NYSE:GMED), a company specializing in medical devices, by increasing its price target to $91.00 from the previous $87.00. The firm has also reaffirmed its Buy rating for the stock. Currently trading at $82.94, GMED has demonstrated remarkable strength with a 73% return over the past year.
According to InvestingPro data, seven analysts have recently revised their earnings estimates upward, with price targets ranging from $80 to $100. The move comes as part of a broader analysis of the Medical (TASE:PMCN) Technology (MedTech) sector's performance and prospects.
BTIG's commentary highlighted the MedTech sector's underperformance relative to the S&P 500 for the fourth consecutive year. Despite this trend, the firm recognizes a return to robust fundamentals within the sector for the year 2024. These include strong demand for medical procedures, healthy capital equipment trends, and the stability of the US economy.
Looking forward to 2025, BTIG anticipates that revenue growth and procedure dynamics will likely maintain their stability within the domestic market. The firm notes that the MedTech sector does not appear to be a focus for the new Trump administration and points out that MedTech valuations are currently near the lower end of their historical averages, suggesting a favorable setup for investors.
Globus Medical has already demonstrated impressive growth, with revenue increasing by 102% in the last twelve months and maintaining a strong market position with an $11.3 billion market capitalization.
However, the sector is not without its challenges. Large multinational companies in the MedTech field may face new hurdles such as potential shifts in corporate tax rates and the impact of trade wars. BTIG suggests that these uncertainties could create opportunities for investors to pivot towards small to mid-cap (SMID-cap) growth stocks that are domestically oriented. These companies are characterized by solid fundamentals and a strong emphasis on profitability.
The firm also mentions that paired with lower interest rates and a better financing environment, as well as reasonable valuations, the year 2025 may see relative outperformance, particularly for SMID-cap growth stocks.
BTIG's year-end special report includes multiple notes for investors, such as key catalysts and a conference calendar, to provide a comprehensive view of the sector's outlook.
In other recent news, Globus Medical has been in the spotlight for its robust third-quarter growth and promising future prospects.
The company reported a significant sales increase to $626 million, marking a 63% growth year-over-year. Non-GAAP EPS reached a record high of $0.83, up 45%, and the company generated a record free cash flow of $162 million. This growth was driven by strong U.S. spine sales, international expansion, and the continued integration of the NuVasive (NASDAQ:NUVA) merger.
Morgan Stanley (NYSE:MS) sees growth opportunities for Globus Medical in the expansion of robotics, specifically the upcoming ExcelsiusFlex (EFlex) stock. With an estimated 1.1 million total knee arthroplasty (TKA) procedures expected in the US during 2024, and with around 20% projected to use robotic assistance, the opportunity for revenue growth is significant. The firm estimates that each 1% share gain in the procedure market could translate to over $11 million in revenue. This growth potential is supported by InvestingPro data, which reveals eight analysts have revised their earnings upward for the upcoming period.
Lastly, the company is optimistic about future growth, particularly in 2025, with a focus on integration, innovation, and cost-saving measures.
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