Zimmer Holdings Inc.ZMH

Morningstar Rating

Stock Research and Analysis

by Julie Stralow, CFA

Zimmer shines in several orthopedic niches that typically possess high barriers to entry and sticky surgeon relationships. Although these positive attributes should help the firm generate excellent returns for the long run, product gaps and increased Read more

Bulls Say

Demographic and lifestyle trends should keep orthopedic implant volume increasing at a healthy clip for the foreseeable future.

As a leading provider of knees and hips worldwide, Zimmer is poised to capitalize on expected volume growth in the industry.

The firm's share-repurchase program looks like a good way to return value to shareholders given recent prices. Read more

Bears Say

Third-party reimbursers may cut orthopedic procedure rates in an effort to afford higher future volume. With lower reimbursement rates, hospitals may demand price cuts from suppliers like Zimmer.

Uncertainty about U.S. health-care reform clouds Zimmer's prospects and may weigh on the stock for some time.

Zimmer doesn't sell a hip-resurfacing product in the United States, and it will probably miss out on this fast-growing niche for several more years as it works on clearing regulatory hurdles for the product. Read more

Strategy

Zimmer develops new generations of devices and then educates orthopedic surgeons on how to use them. Ongoing training aims to improve surgical outcomes and, as a side benefit, maintain loyalty to Zimmer's Read more

Management

We give Zimmer an A Stewardship Grade. We like that Zimmer recently separated the chairman and CEO positions after Ray Elliott retired from both spots. We think CEOs should have to report to a higher authority, namely shareholders, through the board, Read more

Profile

Zimmer Holdings is a leading provider of orthopedic medical devices. The firm focuses primarily on joint reconstruction, where it remains a key leader in knee and hip implants. Read more

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