Yahoo Finance Globus Medical (GMED) Up 7.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Globus Medical (GMED). Shares have added about 7.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Globus Medical Q1 Earnings Surpass, Margins Down
Globus Medical reported adjusted earnings per share of 72 cents in the first quarter of 2024, which beat the Zacks Consensus Estimate by 30.9%. The metric increased 35.8% year over year.
The adjusted EPS excludes certain non-recurring expenses and benefits like the amortization of intangibles, acquisition-related costs/licensing and provision for litigation, among others.
Without adjustments, the company registered a GAAP diluted loss of 5 cents compared with the year-ago EPS of 48 cents.
Revenues
Worldwide sales in the quarter under review registered a staggering improvement of 119.3% year over year to $606.7 million. The reported figure exceeded the Zacks Consensus Estimate by 3.4%.
Net sales increases were driven by the addition of NuVasive, as well as increased volumes of spine product sales and enabling technology products and services.
Geographic Details
During the quarter under review, net sales generated in the United States increased 106.3% year over year (same at CER) to $482.9 million. Our model projected a 110.6% improvement in sales from this region.
Across international markets, revenues surged 190.7% (up 194.1%% at CER) to $123.7 million. This surpassed our model’s forecasted improvement of 110.7%.
Product Category
Musculoskeletal Solutions generated revenues of $574.7 million, up 128.4% year over year, mainly driven by the contributions from the NuVasive merger. Our model projected a year-over-year increase of 120.8% from this segment.
Enabling Technologies generated revenues of $32 million in the first quarter of 2024, an improvement of 27.5% from the prior-year figure. The growth was driven by increased sales of Excelsius GPS and the E3D system. The reported figure also surpassed our model’s projected year-over-year increase of 8.7%.
Margins
The gross profit in the reported quarter rose 77.4% year over year to $365.2 million. However, the gross margin contracted 1,421 basis points (bps) to 60.2% on a 241% surge in the cost of sales.
SG&A expenses in the reported quarter totaled $248.7 million, up 103.2% from the year-ago quarter’s levels. Research and development expenses increased 171.6% to $57.3 million.
The quarter’s adjusted operating profit fell 5.1% from the year-ago quarter’s figure to $59.2 million. The adjusted operating margin contracted 1,278 bps in the quarter to 9.8%.
Cash Position
Globus Medical exited the first quarter of 2024 with combined cash and cash equivalents and short-term marketable securities of $434.5 million compared with $517.8 million at the end of 2023.
Cumulative net cash provided by operating activities at the end of the first quarter was $52.4 million compared with the year-ago figure of $53.3 million.
2024 Guidance
Globus Medical provided an updated outlook for 2024.
The full-year net sales are projected in the band of $2.460 billion-$2.485 billion (earlier $2.450 billion-$2.475 billion). The Zacks Consensus Estimate is currently pegged at $2.46 billion.
The company’s adjusted earnings per share guidance for 2024 is in the range of $2.75-$2.85 (previously $2.68-$2.70). The Zacks Consensus Estimate is pegged at $2.69.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Globus Medical has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Globus Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Globus Medical belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Avanos Medical (AVNS), has gained 3.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Avanos Medical reported revenues of $166.1 million in the last reported quarter, representing a year-over-year change of -13.4%. EPS of $0.22 for the same period compares with $0.27 a year ago.
Avanos Medical is expected to post earnings of $0.29 per share for the current quarter, representing a year-over-year change of +20.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Avanos Medical. Also, the stock has a VGM Score of D.
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Globus Medical, Inc. (GMED) : Free Stock Analysis Report
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