A month has gone by since the last earnings report for Globus Medical (GMED). Shares have added about 2.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Globus Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Globus Medical reported third-quarter 2024 adjusted earnings per share of 83 cents, which beat the Zacks Consensus Estimate by 27.7%. The figure increased 45.6% year over year.
The adjusted EPS excludes certain non-recurring expenses and benefits, such as the amortization of intangibles, merger and acquisition-related costs/licensing, and provision for litigation.
Without adjustments, the company registered a GAAP diluted earnings per share of 38 cents, a huge improvement from the year-ago figure of 1 cent.
Worldwide sales increased a staggering 63.1% year over year to $625.7 million. The reported figure exceeded the Zacks Consensus Estimate by 3.4%.
Net sales improvement was driven by the addition of NuVasive, as well as increased volume of spine product sales and enabling technology products and services.
Net sales generated in the United States increased 60.3% year over year (same at CER) to $495.8 million. Our model projected a 61.7% improvement in sales from this region.
Across international markets, revenues surged 74.8% (up 76.2% at CER) to $129.9 million, which surpassed our model estimate of $104.3 million.
Musculoskeletal Solutions generated revenues of $587.4 million, up 65% year over year, mainly driven by contributions from the NuVasive merger. Our model projected a year-over-year top-line improvement of 60.4% from this segment.
Enabling Technologies generated revenues of $38.3 million, up 38.5% from the prior-year reported figure. The growth was driven by increased sales within the U.S. market across its Excelsius GPS and E3D products. The reported figure also surpassed our model estimate of $33.5 million.
The gross profit in the reported quarter rose 43.1% year over year to $355.2 million. However, the gross margin contracted 794 basis points (bps) to 56.8% on a 99.8% surge in the cost of sales.
SG&A expenses in the reported quarter totaled $240.7 million, up 54.1% from the year-ago quarter’s level. Research and development expenses increased 20.6% to $35.4 million.
Adjusted operating profit rose 26.1% from the year-ago figure to $79.1 million. Despite that, the adjusted operating margin contracted 371 bps to 12.6% due to increased operating expenses.
Globus Medical exited the third quarter of 2024 with combined cash and cash equivalents and short-term marketable securities of $694.7 million compared with $410.4 million at the end of the second quarter of 2024.
Cumulative net cash provided by operating activities at the end of the third quarter was $310.3 million compared with the year-ago figure of $138.3 million.
Globus Medical raised its 2024 guidance.
The full-year net sales are now projected to be in the band of $2.49-$2.50 billion (compared with the earlier projected range of $2.47-$2.49 billion). The Zacks Consensus Estimate is currently pegged at $2.48 billion.
The company’s adjusted earnings per share for 2024 is now expected to be in the range of $2.90-$3.00 (up from the previously guided range of $2.80-$2.90). The Zacks Consensus Estimate is pegged at $2.84.
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Globus Medical has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Globus Medical has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Globus Medical belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Edwards Lifesciences (EW), has gained 12.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Edwards Lifesciences reported revenues of $1.35 billion in the last reported quarter, representing a year-over-year change of -8.5%. EPS of $0.67 for the same period compares with $0.59 a year ago.
For the current quarter, Edwards Lifesciences is expected to post earnings of $0.55 per share, indicating a change of -14.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Edwards Lifesciences. Also, the stock has a VGM Score of D.
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