EarningsBeats Digest

Published: Mon, 12/07/20

EarningsBeats.com Digest for December 7, 2020

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Looking For A Resumption Of The Up Channel

Zimmer Biomet (ZBH) has a solid history of outperforming during the month of December. One glance at the seasonality chart and you can see that not only is December a strong month, but it's followed up by a very solid month in January as well:

ZBH gapped higher on November 9th as the positive vaccine news was released from Pfizer. ZBH benefits from a number of elective medical procedures and those took a tumble during the pandemic. As we move closer to a more normal environment, a stock like ZBH should benefit. On November 6th, ZBH posted quarterly revenues and EPS that crushed Wall Street estimates. After the report, there was plenty of indecision among traders. However, the vaccine news resulted in a big gap higher on November 9th:

As COVID-19 cases surge into the end of the year and into 2021, ZBH could suffer. But the real key is whether Wall Street will look beyond the short-term pandemic issues and instead focus on the longer-term growth. I believe it will focus on the latter. There's a chance we'll see ZBH fill its gap back to the 140 level, but I believe the odds are greater that the up channel in play will be the driving force. As such, I'm looking for ZBH to return to the 160 level, testing not only that November 9th open, but also the highs that printed back in February 2020. A breakout above that level would be extremely bullish for the stock.

Happy trading!

Tom Bowley, Chief Market Strategist

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