Globus Medical’s Board of Directors Approves $200M Share Buyback Program

Globus Medical, Inc. (NYSE: GMED) has received its board of directors’ approval for an incremental $200 million share repurchase program. This announcement is in sync with the company’s commitment of rewarding shareholders well.

Shares of this medical device manufacturer lost 0.4% on Friday, closing the trading session at $71.82.

Globus Medical is a manufacturer of musculoskeletal disorders-related healthcare solutions. Among its offerings are spine products, pain management solutions, products to deal with orthopedic trauma, and others. It is headquartered in Audubon, PA.

Inside the Headlines

Under the newly approved share repurchase program, Globus Medical is allowed to buy back its shares from the open market or through private transactions. The size of the repurchase or the nature and timing of the transaction has been left for the company to decide.

The buyback program will be funded with the company’s cash reserves. Exiting 2021, the company’s cash, cash equivalents, and restricted cash were $193.1 million, down 19.4% year-over-year. Also, net cash flow generated from operating activities totaled $276.3 million in 2021, up 39% from the previous year.

Interestingly, Globus Medical communicated that it was left to buy back $95.3 million worth of shares under its $200 million program approved in March 2020. Effectively, the company’s share repurchase authorization now totals $295 million.

In 2021, the company refrained from repurchasing any shares. It bought back shares worth $104.7 million in 2020.

Official Comment

The Executive Chairman of Globus Medical, David Paul, said, “Our announcement today reflects the continued confidence that we have in our long-term growth profile and underlying earnings strength.”

He added, “We continue to view Globus as an attractive investment opportunity over the long-term and our strong balance sheet provides us with the financial flexibility to drive continued strategic investments, both organic and inorganic, while also providing returns to our shareholders through this share repurchase program.”

Analysts’ Take

Recently, David Turkaly, an analyst at JMP Securities, maintained a Holding rating on Globus Medical.

Another analyst at UBS, Matthew Taylor, reiterated a Buy rating on Globus Medical while lowering the price target to $82 (2.53% downside potential) from $91.

Wall Street is cautiously optimistic on Globus Medical and has a Moderate Buy consensus rating based on 7 Buys and 3 Holds. The average GMED price target of $80.11 suggests 11.54% upside potential from current levels. Over the past year, shares of Globus Medical have increased 16.8%.

Risks Analysis

According to the TipRanks Risk Factors tool, Globus Medical is at risk mainly from three factors: Finance and Corporate, Production, and Tech & Innovation. While Finance and Corporate risk category contributes 13 risks to the total 52 risks identified for the stock, Production and Tech & Innovation account for 10 and 9 risks, respectively.

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