International Growth Drives GMED Stock Amid Fierce Competition

Globus Medical GMED continues to gain from surging demand for its Musculoskeletal Solutions products. However, a challenging macroeconomic scenario continues to plague Globus Medical. The stock carries a Zacks Rank #3 (Hold).

Factors Driving GMED’s Shares

Globus Medical is gaining market share in the musculoskeletal solutions space, banking on the strong performance of its implantable devices, biologics, accessories and unique surgical instruments used in an expansive range of spinal, orthopedic and neurosurgical procedures. The company is particularly seeing notable gains across its product portfolio in expandables, biologics, MIS screws, 3D printed implants and cervical offerings.

In the fourth quarter, Globus's musculoskeletal sales improved 4.5% year over year. The growth was driven primarily by strong contributions from the company’s international spine business and a 43.5% increase in global Enabling Technologies revenues. Globus Medical is also optimistic about the recently inked deal to acquire Nevro Corporation. The acquisition of Nevro is expected to expand Globus’ reach into the musculoskeletal market, adding an additional $2 billion market space in this niche.

During the fourth quarter of 2024, the company launched five new products. Among the launches, we should mention the QUARTEX MIS system, which offers a percutaneous solution designed to minimize disruption in the posterior cervical and upper thoracic spine. Then there is the ALLEGIANCE Retractor System, a ringless interior exposure system designed for quick setup, precise tissue retraction and maximum rigidity. In addition, the company launched the ExcelsiusFlex robotic navigation platform and the ACTIFY Unicondylar Knee System in the fourth quarter.

The company currently awaits a series of product launches throughout the Musculoskeletal portfolio in the coming months of 2025. The company's high R&D spending trend is indicative of a healthy pipeline. We estimate the company's R&D expense to increase 11.2% in 2025.

Globus Medical, Inc. Price

Globus Medical, Inc. price | Globus Medical, Inc. Quote

Globus Medical has merged its business with NuVasive. The combined global musculoskeletal company is focused on rapid innovation, addressing unmet clinical needs and improving offerings to surgeons and patients. The combination capitalizes on GMED’s complementary commercial organization and should allow it to accelerate its globalization strategies to increase customer reach and strengthen surgeon relationships.

At the end of the fourth quarter, Globus noted that the integration of NuVasive is progressing well. The combined company exceeded its 2024 synergy targets and was able to accelerate value creation and shareholder return as a result. For the second year’s synergies, the company is successfully implementing common systems in the international markets, expanding its in-house production for NuVasive implants, consolidating external vendors and utilizing its existing product offerings to drive cross-selling.

Over the past three months, shares of GMED have gained 3.7% compared with the industry’s 3.6% rise. The company is experiencing a high level of synergy from NuVasive business integration. With its consistent focus on strategic market expansion and new product launches, we expect the stock to gain further momentum in the coming days.

Concerning Factors for GMED

Like other industry players, Globus Medical is currently grappling with negative trends in the global economy, including interest rate fluctuations, increases in inflation and financial market volatility. These factors are affecting the company’s operations and financial performance. The increasing geopolitical complexities across the globe, in particular, have resulted in a significant rise in raw material and freight costs for the company. In 2024, the company incurred an 88.9% surge in the cost of goods sold. The macroeconomic factors, along with the rising wage and raw material costs, are also leading to a significant escalation in the company’s operating expenses. SG&A expenses in 2024 were up 52.5% from the year-ago quarter.

Further, the presence of a large number of players made the musculoskeletal devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of more prominent players like Zimmer Biomet, Stryker, Johnson & Johnson’s DePuy, Smith & Nephew, and Medtronic. Globus Medical needs to constantly introduce or acquire new products to withstand the competitive pressure and maintain its market share.

Key Picks

Some better-ranked stocks in the broader medical space are Veracyte VCYT, Insulet PODD and Abbott ABT. Each of these carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Estimates for Veracyte’s 2025 EPS have jumped 6.9% in the past 30 days. Shares of the company have risen 49.5% in the past year against the industry’s 11.3% fall. Its earnings yield of 3.8% compares favorably with the industry’s -3.6% yield. VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 515.9%.

Insulet shares have rallied 43.5% in the past year. The company has an estimated long-term earnings growth rate of 25.9% compared with the industry’s 16.5% growth. PODD’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 27.5%. In the last reported quarter, it posted an earnings surprise of 9.5%.

Estimates for Abbott’s 2025 EPS have remained constant at $5.15 in the past 30 days. Shares of the company have jumped 14.1% in the past year compared with the industry’s 1.5% growth. It has an earnings yield of 4.1% compared with the industry’s flat yield. ABT’s earnings surpassed estimates in three of the trailing four quarters and matched in one, the average surprise being 1.6%.

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This article originally published on Zacks Investment Research (zacks.com).

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