Zacks_Analysts' Blog : Zimmer Implants Plating System - Analyst Blog

Zimmer (ZMH) recently implanted its NCB (Non-Contact Bridging) periprosthetic plating system for the first time. The system, scheduled for full release in the fall of 2010, is targeted at complex femoral fractures, which can occur around a hip or knee implant. 



It has been observed that hip and knee replacements get more complicated by femur fractures. As a result, we expect Zimmer’s implant system to be of great assistance to orthopedic surgeons as they often come across several issues, including poor bone quality, while repairing these fractures during replacements.

Zimmer is a leading orthopedic medical devices company primarily focusing on hip and knee implants. It is engaged in the design, development, manufacture, and marketing of reconstructive and spinal implants, as well as trauma and related orthopedic surgical products (OSP), which include surgical supplies and instruments designed to aid surgical procedures and post-operation rehabilitation.

 

Zimmer’s largest segment, Reconstructive Implants, recorded a 4% annualized growth of revenues to $808.2 million during the second quarter of 2010. The company earns 76% of its total revenues from this segment.

 

The Reconstructive Implant division manufactures joint replacement devices for knees, hips, shoulders and elbows (extremities). Orthopedic reconstructive implants restore the functioning of the joints that have been lost due to disease or trauma.

 

The fundamentals underlying the orthopedic reconstructive industry remain strong and we believe that Zimmer still has the potential for positive mix-shift. In addition, an aging global population, obesity, proven clinical benefits, new material technologies, and innovation in surgical techniques will drive the company in the long-term. Zimmer is on its way to achieving market growth through new product launches, employment of new technologies and expansion of its footprint in the growing China market.

 

However, we are concerned about the current macro-economic uncertainty and pricing pressure witnessed by Zimmer. This leads to less visibility on the company’s performance going forward.

 

We are currently Neutral on the stock.