On Tuesday, Roth/MKM adjusted its price target for Globus Medical (NYSE:GMED), a medical device company with a market capitalization of $11.1 billion, from $100.00 to $115.00, while maintaining a Buy rating on the stock. Currently trading at $81.70, the company has demonstrated remarkable strength with a 65% return over the past year.
According to InvestingPro analysis, the stock is currently trading near its Fair Value, with 7 analysts recently revising their earnings expectations upward. The firm cited improved salesforce retention as a key driver of the company's outperformance in 2024, surpassing initial expectations.
Looking ahead to 2025, Roth/MKM anticipates continued outperformance due to an acceleration in both top-line growth and margins, as the company begins to realize merger-related synergies. The company's strong financial position is reflected in its "GREAT" overall health score from InvestingPro, with particularly robust scores in profit (3.66/5) and price momentum (3.87/5).
The analyst at Roth/MKM has increased their 2025 estimates for Globus Medical (TASE:PMCN) to match the consensus, which has recently edged higher, indicating there may still be room for upside. The company's top-line growth is projected to be between 3.9% and 4.3% on a pro-forma basis. In 2025, this growth is expected to reach at least 6.5%, benefiting from a reduction in sales force attrition that began in 2024 and enhanced cross-selling as sales teams become more proficient.
Globus Medical's core spine and Musculoskeletal Solutions segments have shown significant progress, with expectations of at least 6% growth. This is supported by a 5.4% growth in the previous quarter and robust international expansion, particularly in Musculoskeletal Solutions, which is experiencing double-digit growth rates.
Additionally, the company's enabling technologies division, which includes its robotics platform, is forecasted to grow by 16% as it transitions from outright sales to a rental model, along with increased adoption of its imaging and upgraded navigation technologies.
Despite potential competition from Stryker (NYSE:SYK)'s recent entry into the spine market with its MAKO robot, Roth/MKM remains optimistic about Globus Medical's prospects. With a healthy gross profit margin of 67% and sufficient cash flows to cover interest payments, the company appears well-positioned for future growth.
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Early feedback on Stryker's offering has been mixed, and expectations for Globus Medical's ExcelsiusFlex robot for Total (EPA:TTEF) Knee Arthroplasty are modest, but there is potential for upside. The firm estimates that a single placement of the ExcelsiusFlex could generate significant recurring revenue from high-volume centers.
In other recent news, Globus Medical has reported significant growth in its financial performance. The company's recent earnings call revealed a substantial sales increase to $626 million, marking a 63% growth year-over-year. This growth was driven by strong U.S. spine sales, international expansion, and the integration of the NuVasive (NASDAQ:NUVA) merger. Non-GAAP EPS reached a record high of $0.83, up 45%, and the company generated a record free cash flow of $162 million.
In the MedTech sector, BTIG has increased its price target for Globus Medical to $91.00, reaffirming its Buy rating. The firm anticipates that revenue growth and procedure dynamics will maintain their stability within the domestic market into 2025. Furthermore, BTIG suggests that the MedTech sector's current valuations, near the lower end of their historical averages, suggest a favorable setup for investors.
Morgan Stanley (NYSE:MS) has highlighted growth opportunities for Globus Medical in the expansion of robotics, specifically the upcoming ExcelsiusFlex stock. The firm estimates that each 1% share gain in the procedure market could translate to over $11 million in revenue. This projection is supported by data from InvestingPro, which reveals that eight analysts have revised their earnings upward for the upcoming period.
These recent developments indicate a positive trajectory for Globus Medical, with robust financial performance and promising growth prospects in the MedTech sector and robotics expansion. However, it's important to note that these projections are based on current market conditions and analyst estimates, and actual results may vary.
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