BTIG Buys Into Globus Medical's Longer-Term Vision

Globus Medical Inc’s (NYSE: GMED) shares have declined around 33% from their year-end 2019 high, and the company has a strong balance sheet that can be used to acquire assets at depressed values, according to BTIG.

The Globus Medical Analyst

BTIG’s Ryan Zimmerman upgraded Globus Medical from Neutral to Buy and set a $46 price target. 

The Globus Medical Thesis

Globus Medical’s installed base is approaching 100 units, a scale at which “implant pull-through will support sizable hardware growth,” Zimmerman said in the Wednesday upgrade note. (See his track record here.)

Coronavirus-induced uncertainties could prevent a near-term rebound in shares, and there may be low demand for spine procedures in the first half of 2020, with people opting out of elective procedures, the analyst said. 

Even with multiple weeks of lost revenue, Globus Medical could generate low double-digit earnings growth in fiscal 2021 as procedures are postponed, he said. 

The company is transitioning to a broader musculoskeletal business and could continue to feel margin pressure as it makes investments in this transition, Zimmerman said.

Despite margin pressure, the company’s operating profile is significantly stronger than that of its peers, the analyst said. 

Globus Medical has around $721 million in cash, no debt and a share buyback authorization of $200 million, according to BTIG.

With these in place, the balance sheet gives the company shelter through the first half of 2020, Zimmerman said, adding that the company could use its balance sheet strength to acquire assets at depressed levels.

Globus Medical Price Action

Globus Medical shares were down 4.66% at $38.03 at the time of publication Wednesday. 

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