Shareholders of Globus Medical would probably like to forget the past six months even happened. The stock dropped 28.9% and now trades at $58.14. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for GMED? Find out in our full research report, it’s free.
Why Does GMED Stock Spark Debate?
With operations spanning 64 countries and a portfolio of over 10 new products launched in 2023 alone, Globus Medical (NYSE: GMED) develops and sells implantable devices, surgical instruments, and technology solutions for spine, orthopedic, and neurosurgical procedures.
Two Positive Attributes:
1. Constant Currency Revenue Propels Growth
We can better understand Medical Devices & Supplies - Specialty companies by analyzing their constant currency revenue. This metric excludes currency movements, which are outside of Globus Medical’s control and are not indicative of underlying demand.
Over the last two years, Globus Medical’s constant currency revenue averaged 61.4% year-on-year growth. This performance was fantastic and shows it can expand quickly on a global scale regardless of the macroeconomic environment. 
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Globus Medical’s revenue to rise by 18.5%. While this projection is below its 53.3% annualized growth rate for the past two years, it is commendable and indicates the market is baking in success for its products and services.
One Reason to be Careful:
New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Globus Medical’s ROIC has decreased over the last few years. If its returns keep falling, it could suggest its profitable growth opportunities are drying up. We’ll keep a close eye.
Final Judgment
Globus Medical’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 16.4× forward P/E (or $58.14 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Globus Medical
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