Insider buying can provide clues about a stock’s future direction. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.
In this report, we are going to highlight some bullish insider buying at Zimmer Biomet Holdings Inc (ZBH:US). Zimmer Biomet designs, manufactures, and markets a broad range of healthcare products including orthopedic reconstructive products, trauma products, and spine, craniomaxillofacial and thoracic products. The company is listed on the New York Stock Exchange and currently has a market capitalization of $34.1 billion.
Zimmer Biomet: Insider Buying
Our insider transaction data shows that on 6 May, board member Arthur Higgins bought 1,000 ZBH shares at a price of $171.58 per share. This purchase – which cost the insider $172,000 – increased the size of his holding by 42%.
Private Equity Experience
Mr. Higgins has a considerable amount of experience in both the healthcare and the private equity industries. Previously, he was the Chairman of Assertio Therapeutics. Before this, he was the Chairman of Bayer HealthCare AG. Since 2010, he has been a consultant to private equity group Blackstone Healthcare Partners – which partners with pharmaceutical, biotech and medical technology companies. Given his experience, he is likely to have a good read on Zimmer Biomet’s prospects.
His purchase of 1,000 shares on 6 May stands out because it has increased the size of his holding substantially. This suggests that he is very confident the stock is undervalued at present. It is also the largest insider purchase at Zimmer Biomet for several years.
Momentum to Continue
Zimmer Biomet recently posted a solid set of first-quarter results that were stronger than anticipated. For the quarter, net sales were $1.85 billion, an increase of 3.6% year on year. Meanwhile, adjusted earnings per share came in at $1.71, well ahead of the consensus forecast of $1.53.
Looking ahead, the company said that it expects to see further growth as the pandemic subsides. For the full year, it expects 14% to 17% revenue growth on a reported basis and adjusted diluted earnings per share of $7.60 - $8.00 – well above last year’s EPS figure of $5.67.
"Our performance was stronger than we anticipated in the first quarter, as we saw signs of the pandemic beginning to subside across many regions toward the end of the quarter driven by the acceleration of vaccine rollout. As we move into the second quarter, we expect that momentum to continue and believe we are well-positioned to meet the needs of our customers as elective procedures return," said President and CEO Bryan Hanson.
In light of this outlook, we see the insider buying here as bullish.