We came across a bullish thesis on Zimmer Biomet Holdings, Inc. (ZBH) on Twitter by QuestforYield. In this article, we will summarize the bulls’ thesis on ZBH. Zimmer Biomet Holdings, Inc. (ZBH)'s share was trading at $103.99 as of March 4^th. ZBH’s trailing and forward P/E were 23.47 and 12.66 respectively according to Yahoo Finance

A medical team wearing surgical masks and gloves carrying out a hip or knee joint replacement surgery with the help of surgical navigation systems.

Zimmer Biomet (ZBH) is a global leader in the MedTech industry, dominating the hip and knee replacement market with nearly a century of expertise across 100+ countries. The company is well-positioned in a growing market fueled by an aging population, increasing demand for minimally invasive solutions, and technological advancements such as robotics, smart implants, and 3D printing. The orthopedic device market is expanding at a 4-5% CAGR, with robotic-assisted surgery growing even faster at over 20% annually, creating a strong runway for future growth. Additionally, the shift toward outpatient surgery centers (ASCs) aligns with ZBH’s strategy, reinforcing its leadership position.

Zimmer Biomet’s ability to generate strong free cash flow is underpinned by multiple catalysts. The company is executing on a robust innovation strategy, with over 50 new product launches expected by 2027, doubling the value of its product pipeline compared to five years ago. Operational efficiency initiatives, including supply chain optimization and restructuring efforts, are enhancing profitability and strengthening margins. ZBH is also positioned to gain market share through its comprehensive product portfolio, which includes cutting-edge navigation and robotics systems. Importantly, the company is highly focused on shareholder returns, committing to returning at least 65% of free cash flow to investors. Currently, ZBH boasts an attractive buyback yield of over 5%, reinforcing management’s confidence in the company’s long-term prospects.

Despite these strengths, Zimmer Biomet trades at an appealing valuation of under 20x free cash flow, with analysts projecting over 70% FCF growth in the next three years. This presents a compelling investment opportunity, as ZBH combines market leadership, a strong innovation pipeline, operational excellence, and a disciplined capital return strategy. At its current valuation, the company offers significant upside potential, making it a high-quality MedTech growth story at an attractive price.

Zimmer Biomet Holdings, Inc. (ZBH) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 53 hedge fund portfolios held ZBH at the end of the fourth quarter which was 43 in the previous quarter. While we acknowledge the risk and potential of ZBH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ZBH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.