Opinions
Barry Schwartz
Zimmer Biomet Holdings Inc.
ZBH-N
TOP PICK
May 07, 2015
Stock price when the opinion was issued
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They reported earnings that met expectations but guidance was tepid. It spooked the market with a suggestion of slower growth. Anything hinting at slower growth in the healthcare space has this effect. Short term investors should stay out of healthcare. 3-5 year horizon investors will find this a great company to hold.
Thinks it is time to look at certain parts of healthcare. The situation is a little muddied, because we are faced with changes to the Affordable Care Act, and are not sure what form they are going to take and who it is going to affect. This company is a maker of joints, artificial hips, etc. There is some risk of competition and commoditization of these devices. He would probably look for another area in the healthcare arena. Some of the larger insurers are very interesting.
(A Top Pick Oct 13/16. Down 11%.) This is medical parts, knees, hips, spinal fusion products, etc. Had felt the stock would benefit from aging baby boomers. However, they had some inventory problems, and didn’t experience the kind of growth he expected. It’s still a great place to be.p
Hips, knees and extremities. Demand will grow 4-6% over the long term. They have not yet expanded outside of North America. People are getting older and the number of 60 year olds is getting wider and they wear out their hips and knees. They don’t have a lot of pricing power, but have certainty in the need for the products. It sold off recently from currency exposure. The value is quite reasonable here. They have a great track record of increasing dividends and buying back stock.