Key Takeaways
- Zimmer Biomet shares jumped 15% after third-quarter sales grew 3.7% in constant currency and it raised its 2026 guidance.
- Hips, sports medicine and trauma, and technology all grew 7% or faster, while knees fell 2.6%.
- Stryker, Smith & Nephew and Johnson & Johnson face the same knee question, and Smith & Nephew just cut its outlook.
Zimmer Biomet (ZBH) jumped 15% today after a third-quarter beat and a raised full-year outlook. Its rivals rallied too: Stryker (SYK) is up 8%, and Smith & Nephew (SNN) is up 7% even after cutting its own outlook this morning.
Smith & Nephew also confirmed it had approached Johnson & Johnson (JNJ) this year about combining with J&J’s DePuy Synthes orthopaedics business. Those talks have ended.
Hips and tech did the heavy lifting
Sales reached $2.06 billion. By business, in constant currency:
- Hips: up 7%
- S.E.T. (sports medicine, extremities and trauma): up 7.1%
- Technology & Data, Bone Cement and Surgical: up 13.0%
- Knees: down 2.6%
CEO Ivan Tornos said the businesses outside knees “grew at upper single digit or double-digit rates, validating the progress of our diversification strategy.”
That let Zimmer raise its 2026 organic constant-currency growth guidance to 3.0%-3.5%, from 2.25%-3.25%. Adjusted EPS guidance moved to $8.50-$8.60, from $8.47-$8.59.
Going into the report, analysts already expected $8.54 of normalized EPS this year, rising to $9.66 by 2028:
Analysts shouldn’t need to move those estimates much on today’s guidance. Investors were simply expecting less.
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Knees are still the problem
Knees, 37% of Zimmer’s sales, fell in the US and abroad.
Smith & Nephew has the same problem: it now expects underlying revenue growth of around 3% this year, and CEO Deepak Nath said the cut reflects “the slower growth in US Orthopaedics, which we expect to continue through the fourth quarter.”
Stryker’s orthopaedics sales grew 5.9% organically in its third quarter, though, so Zimmer can’t blame its whole knee decline on a soft market. Is Stryker taking knee share?
J&J’s MedTech sales grew 2.5% operationally last quarter, with trauma the only orthopaedics driver it named. With the Smith & Nephew talks over, its knees and hips need their own fix too.
Cheap, even after the jump
Zimmer went into today at 11x forward earnings, against a five-year average of 14x:
At today’s price, it’s about 13x.
The way I see it, the stock can keep climbing as long as hips and technology outgrow the knee decline. The fourth-quarter report and first 2027 guidance, likely early next year, will show us whether knees have stopped shrinking.
So what is Zimmer Biomet stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
