We came across a bullish thesis on Zimmer Biomet Holdings, Inc. (ZBH) on Business Model Mastery’s Substack by The Antifragile Investor. In this article, we will summarize the bulls’ thesis on ZBH. Zimmer Biomet Holdings, Inc. (ZBH)'s share was trading at $104.71 as of Jan 14^th. ZBH’s trailing and forward P/E were 19.98 and 12.22 respectively according to Yahoo Finance.

Zimmer Biomet (ZBH) is a dominant player in the orthopedic sector, leading the market with a 36% share in knee implants and a 23% share in hip implants. This commanding position stems from several key factors that give the company a competitive edge. One of its strengths is regulatory expertise, as the development of medical implants requires a lengthy FDA approval process of 5-7 years. This creates a natural barrier to entry, limiting competition. Additionally, Zimmer Biomet has built a specialized distribution network, partnering with over 3,500 healthcare providers worldwide, ensuring its products are a preferred choice in hospitals. Its strong brand trust further solidifies its position, with surgeons preferring Zimmer products for their reliability and customization options, leading to high switching costs.

Despite its market leadership, Zimmer Biomet faces challenges, particularly with its Rosa robotic system. The system, which was designed to complement its joint replacement products, has not gained significant traction, experiencing only 6% growth in 2023. This growth is modest compared to the double-digit growth seen by its competitors' robotics platforms, raising questions about the future potential of the Rosa system. Despite these setbacks, Zimmer Biomet's dominant market share, strong brand recognition, and regulatory expertise provide a solid foundation for continued success in the orthopedic space, making it a key player to watch in the sector.

Zimmer Biomet Holdings, Inc. (ZBH) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held ZBH at the end of the third quarter which was 41 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.

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