2024-02-05 06:33:57 ET
Summary
- Zimmer Biomet's stock has been under pressure due to concerns over the impact of GLP-1 agonists.
- Weight loss drugs could actually increase demand in the near term, and any negative impact is likely to be decades away.
- Ageing populations and improved technology are likely to be more important drivers of joint surgery demand than lower obesity rates.
- ZBH may not be the best way to gain exposure to this setup though given the strength of Stryker's business and Zimmer's past execution problems.
Zimmer Biomet's ( ZBH ) stock has been under pressure over the past few years, which appears to be at least in part due to concerns over the impact of GLP-1 agonists. This fear appears to be misplaced though, as it will likely be decades before any negative impact will be felt. In addition, GLP-1 agonists should provide a near-term tailwind by making more patients eligible for surgery. Joint replacement procedures have been increasing 5% annually , and even if the worst-case scenario occurs, ageing populations and improved technology are likely to support continued robust growth going forward.
Obesity
Obesity is an important contributor to the demand for joint surgery as it increases the load placed on joints. As a result, rising obesity rates have been a tailwind for companies like Zimmer Biomet. The efficacy and sudden surge in popularity of weight loss drugs like GLP-1 agonists are now creating uncertainty about whether obesity rates, and in turn joint surgery demand, will drop. This seems unjustified when considering the facts though....
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Zimmer Biomet: Weight Loss Drug Concerns Are Overblown