Zimmer Biomet Earnings: Strength in Large Joints Leaves the Firm On Track for the Full Year

Wide-moat Zimmer Biomet posted second-quarter results that largely fell in line with our expectations, and the firm remains on track to meet our full-year projections, though the market might have been disappointed with management comments that suggested tempered expectations for 2024. Nonetheless, we're leaving our fair value estimate and 2024 view unchanged for now. With solid quarterly topline growth of 6% in constant currency and adjusted operating margin of 27%, Zimmer Biomet is making progress on its precoronavirus benchmark in 2019 on both measures. We recognize that the firm remains in the early stages of expanding the installed base of Rosa robots, which is a key factor in setting the stage for increased penetration of the new cementless Persona OsseoTi Keel knee. Fortunately, solid demand for large joint replacement fueled by the backlog of patients should help these placements along through 2024.