Place a Bullish Bet on Zimmer Holdings
by Jon Lewis 04/16/09
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Analysts are likewise skeptical. Just one of 16 analysts rates the stock a "buy," leaving more than enough room for skeptics to jump on board the ZMH bandwagon. According to Zacks, that's the fewest number of buys in at least three months.
With all this negativity, the stock should be cruising at multi-month, if not multi-year lows, right?
Hardly. The shares are up 35% since their March low and have popped above all critical daily moving averages. Next up is some chart congestion in the $42 area and the 2009 gap high near $44.
The Street expects Zimmer's Q1 results to show a 10% pullback. That's not quite as much as Q4, but it's worse than the average of the past four quarters. Let's just say analysts are cautious. By the way, the company hasn't missed an estimate for the past six years.
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So what do we have?
A stock on a strong run that has low expectations. With the recession seemingly baked in the cake, look for ZMH to implant some bullish fuel with its report next week. I'll be looking to play a call option.
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Jon Lewis is the co-editor of The Winning Edge trading service designed to help you make options profits around corporate earnings and other market events. For more information about Jon, read his bio here.
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