ZBH Should I Buy
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Zimmer Biomet Holdings Inc (ZBH) is not a strong buy for a beginner, long-term investor at this time. While the company has shown revenue growth in its latest quarter, declining net income, EPS, and gross margin, combined with mixed analyst sentiment and overbought technical indicators, suggest caution. The absence of strong trading signals further supports a hold recommendation.
The stock's MACD is positive and expanding, indicating bullish momentum. However, the RSI is at 86.492, signaling an overbought condition. The stock is trading near resistance levels (R1: 95.618, R2: 98.323), suggesting limited immediate upside potential. Moving averages are converging, which indicates indecision in the market.
Zimmer Biomet exceeded Q4 revenue expectations with a 10.9% YoY increase and announced a $1.5 billion stock repurchase plan. Analysts like Citi and TD Cowen have upgraded the stock recently, citing improving growth and profit potential.
Gross margin also declined, reflecting potential cost pressures. Analysts like UBS and Goldman Sachs have maintained Sell ratings, citing execution issues and slower revenue growth. The RSI indicates the stock is overbought, and there is no recent congress trading data to suggest political interest.
In Q4 2025, revenue increased by 10.9% YoY to $2.244 billion, but net income dropped by 41.84% to $139.3 million. EPS fell by 41.67% to $0.7, and gross margin decreased by 10.19% to 56.77%. While revenue growth is promising, the decline in profitability metrics raises concerns.
Analyst sentiment is mixed. Recent upgrades from Citi and TD Cowen highlight potential growth and profit improvements. However, firms like UBS and Goldman Sachs maintain Sell ratings, citing execution challenges and slower growth. Price targets range from $86 to $120, with a median around $100, close to the current price of $96.79.
