Globus Medical (GMED) Offers Light Guidance but Needham Sees Through Chatter and Raises PT to $75

February 18, 2021 7:57 AM EST
Get Alerts GMED Hot Sheet
Price: $67.00 +1.07%

Rating Summary:
    15 Buy, 6 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 17 | Down: 14 | New: 42
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Needham & Company analyst Mike Matson raised the price target on Globus Medical (NYSE: GMED) to $75.00 (from $65.00) after 4Q20 results suggest continued spine market share gains but the below-consensus 2021 guidance will likely take the focus. That said, accounting for expected headwinds to revenue (~$15-18M from COVID-19 in January) and EPS (~$0.19 from multiple factors), guidance would have been in line (~2% below consensus revenue and a penny above consensus EPS).

The analyst maintained a Buy rating, stating "We expect GMED to gain share in 2021 driven by new product launches, competitive rep hiring, and robotics pull-through." "Management provided 2021 revenue guidance of $880M vs. consensus of $914M. However, management estimates the US Spine headwind in January was ~$15-18M (worth ~2% to total 2021 growth), which appears to be easing into February. Despite a lingering impact from COVID-19, management expects positive growth in 1Q21. Further, GMED is converting its distributors in Japan to its direct sales force which is expected to result in an incremental headwind. Management also provided 2021 adjusted EPS guidance of $1.83 vs. consensus of $2.01. However, this incorporates headwinds from lower interest income (~$0.07), higher tax (~$0.07), and higher SBC (~$0.05)."

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