UBS reiterated a Neutral rating on Zimmer Biomet (NYSE: ZBH), and raised the price target to $132.00 (from $117.00), following the company's 2Q earnings report.

Analyst Matt Miksic commented, "WW sales growth improved in Q2 for most business lines, partially driven by extra selling days (+1.9% WW), and Zimmer Biomet narrowed its gap in U.S. ortho growth relative to peers, which was a clear positive. However, the EPS beat to our estimates was driven primarily below the operating line, with non-op delivering +1c and tax delivering +4c, boosting what would have been a 1c beat at the operating line (+8c from sales net of COGS and lower R&D (+2c) almost entirely offset by 9c in higher SG&A. We note that in two of the past four quarters the upside to ZBH's bottom line was driven primarily more by non-op benefit than by operating upside. This can mean a variety of things, and companies will often invest at a higher level in operating spend when they have the financial flexibility to do so, but we believe it is worth watching. We remain Neutral on ZBH, raising our target from $117 to $132 driven primarily by a higher EV/EBITDA target multiple, reflecting the company's improving top-line performance and narrowing share losses in the U.S. hip and knee market."

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Shares of Zimmer Biomet closed at $131.06 yesterday.