Will This Upgrade Help Zimmer (ZMH) Stock Today?

Story updated at 9:50 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Zimmer  (ZMH)ZMH was upgraded to "outperform" from "market perform" by William Blair Monday.

Zimmergained 1% to $98.49 in morning trading.

The analyst firm also raised its EPS estimates for the company through 2015. Zimmer's recent pullback has created a buying opportunity according to William Blair analysts Mathew O'Brien and Kaila Krum. The analysts added that the Biomet acquisition should be accretive to Zimmer's holdings.

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Separately, TheStreet Ratings team rates ZIMMER HOLDINGS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZIMMER HOLDINGS INC (ZMH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • ZIMMER HOLDINGS INC has improved earnings per share by 15.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ZIMMER HOLDINGS INC increased its bottom line by earning $4.43 versus $4.29 in the prior year. This year, the market expects an improvement in earnings ($6.04 versus $4.43).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Equipment & Supplies industry average. The net income increased by 16.0% when compared to the same quarter one year prior, going from $152.10 million to $176.50 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.6%. Since the same quarter one year prior, revenues slightly increased by 1.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ZMH's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.78, which clearly demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: ZMH Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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