Orthopedic device maker Zimmer Holdings Inc reported solid first-quarter results, reflecting a slight pick-up in demand for joint replacements after a long slide. Its shares touched $65.87, its highest point since September 30, 2008, before easing slightly to $65.68 in late morning New York Stock Exchange trade.
The maker of hip and knee replacements, surgical instruments and dental implants said its net earnings were $208.9 million, or $1.08 per share, compared with $205.4 million, or $1.01 per share, a year before. Adjusted earnings per share were $1.19, compared with the average estimate on Wall Street of $1.12, according to Thomson Reuters I/B/E/S.
Sales rose a stronger-than-expected 5 percent from a year before to $1.12 billion, helped by new product launches and a recovery in hip sales. "Zimmer's hip performance was a bright spot in what has proven to be a sluggish first-quarter (reconstruction) market, with large joint results coming in below expectations for each of Biomet , DePuy and Stryker (Corp)," J.P. Morgan analyst Michael Weinstein wrote in a research report to clients.
Derrick Sung, an analyst with Bernstein Research, attributed share gains to the hip recall by Johnson & Johnson's DePuy Orthopedics and said he expects above-market growth to continue through 2011. "Zimmer is finally showing some progress in stemming their share losses in knees which we view as encouraging," Sung wrote in a note.
The Warsaw, Indiana-based company also reiterated its full-year outlook calling for adjusted earnings per share of $4.60 to $4.80, with revenue up 2 percent to 4 percent. According to Thomson Reuters I/B/E/S, analysts on average have been expecting 2011 earnings per share of $4.71, with revenue at $4.38 billion. Foreign currency translation should increase revenue by an estimated 3 percent, the company said.
"Management commented that they expect to see a US market recovery off of easier comparisons and with potential for further improvement if the economy picks up," Sung said, noting that Zimmer attributed market weakness to the growing unemployment pool among non-Medicare patients who are deferring joint replacement procedures.
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