Zimmer Biomet Holdings Inc. Stock Underperforms Despite Daily Gains

Zimmer Biomet Holdings Inc. (NYSE: ZBH) shares underperformed on Monday, despite experiencing daily gains, when compared to its competitors. The company's stock price decreased by nearly 9% after executives warned that the implementation of a new enterprise resources planning (ERP) system would hit sales and profits in 2024. This warning was given at the Wells Fargo 2024 Healthcare Conference, where Zimmer Biomet executives said the issue would cause a 1% drag on revenue this year, with the headwinds mostly abating by the end of the fourth quarter.

Analysts at Stifel predicted a potential 210-basis-point impact on third-quarter sales from the ERP transition, exacerbating what is already a difficult market environment. Meanwhile, Evercore ISI analysts said the issue could reduce earnings per share (EPS) by 15 cents. This warning has likely contributed to the recent underperformance of the stock.

Zimmer Biomet's stock price has been relatively stable over the past year, with a 52-week price change of -7.99%. However, the recent underperformance can be attributed to the company's warning about the impact of the ERP system implementation on sales and profits in 2024. This warning has likely contributed to the stock's decline, which has reversed the gains made after the company's second-quarter results and acquisition announcement.



Zimmer Biomet's stock performance has been relatively stable over the past year, but the recent underperformance can be attributed to the company's warning about the impact of the ERP system implementation on sales and profits in 2024. This warning has likely contributed to the stock's decline, which has reversed the gains made after the company's second-quarter results and acquisition announcement.



Zimmer Biomet's underperformance compared to its competitors on Monday, despite daily gains, can be attributed to the following specific factors:

1. ERP System Implementation Issues: Zimmer Biomet executives warned that the implementation of a new enterprise resources planning (ERP) system could weigh on its 2024 results. This transition has run into complications, causing production issues and impeding shipments, especially in its sports, extremities, and trauma segments. Analysts at Stifel predicted a potential 210-basis-point impact on third-quarter sales from the ERP transition, exacerbating the already difficult market environment.
2. Market Environment: The broader market environment has been challenging, with analysts noting that the issue could reduce earnings per share (EPS) by 15 cents. This negative sentiment, combined with the ERP system issues, contributed to Zimmer Biomet's underperformance.
3. Short Interest: The latest short interest is 7.34 million, so 3.69% of the outstanding shares have been sold short. This high short interest may also contribute to the stock's underperformance, as short sellers may be betting against the company's stock price.

Zimmer Biomet's stock performance has been relatively stable over the past year, but the recent underperformance can be attributed to the company's warning about the impact of the ERP system implementation on sales and profits in 2024. This warning has likely contributed to the stock's decline, which has reversed the gains made after the company's second-quarter results and acquisition announcement.