Investors in Zimmer Biomet Holdings Inc (NYSE:ZBH) Rush for the Exits


Investors sold off Zimmer Biomet Holdings Inc (NYSE:ZBH) after the joint and dental implant maker declared a revenue miss and lowered its guidance.

Shares wilted 13.99% and closed Monday at $105.40 after trading 10.07 million shares, over seven times average volume.

Zimmer makes orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants, and related surgical products.

Technically, Zimmer Biomet has made a bearish double top pattern at $133, with one peak in August and another on October 10.

Yesterday’s collapse took the stock through and well below its 200-day moving average. These are highly bearish factors and do not bode well for the stock.

Zimmer Biomet Holdings Inc (NYSE:ZBH) in Q3, bugged by supply chain issues

Zimmer declared Q3 EPS of $1.79, which was in line with estimates, and revenue of $1.83 billion, which missed by $10 million but was up 4% year on year.

The company blamed the revenue miss to supply chain issues that made it difficult to forecast demand for certain devices such as knee and hip joints.

“Variable commercial performances by our sales teams were in part caused by unanticipated supply constraints, related to our transitioning supply chain infrastructure,” said David Dvorak, CEO, on the conference call. “This resulted in shortfalls of needed implants and additional instrument sets, to fully exploit sales opportunities in key product categories.”

“As a consequence of these supply constraints, we project fourth quarter sales results to be similar to those of the third quarter,” he added.

Zimmer Biomet Holdings Inc (NYSE:ZBH) guidance

Zimmer also lowered its 2016 revenue outlook to the range $7.63 billion – $7.65 billion from between $7.68 billion – $7.72 billion.

The company also now expects its adjusted earnings in the range $7.90 – $7.95 per share for the year, compared to its previous outlook in the range $7.90 – $8 per share.

However, analysts at Needham said the supply chain issues were only temporary and upgraded the stock to a Strong Buy, though they trimmed the price target from $150 to $148.

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