Globus Medical (NYSE:GMED) shares rose more than 2% intra-day today after BTIG analysts upgraded the company to Buy from Neutral, setting a price target of $60. The analysts’ stance reflects a valuation based equally on P/E and EV/EBITDA ratios. After expressing skepticism over the past 9-12 months about the strategic fit and value of Globus Medical’s acquisition of NuVasive, and mourning the loss of Globus’s traditionally high adjusted EBITDA margins, the analysts now see the current stock valuation as more attractive, suggesting a favorable risk-reward balance.

The analysts believe that the market’s potential downside is limited and that, seven months post-merger, management has likely mitigated significant deal-related risks. As Globus Medical enters fiscal 2024, the analysts expect the company to benefit from a strong spine market and to start realizing cost synergies.

The analysts consider the management’s guidance conservative, factoring in significant sales dissynergies, but see potential for upside in EPS as NuVasive’s cost structure is optimized. While they don’t expect a return to mid-30% adjusted EBITDA margins, the analysts anticipate a clear margin improvement trajectory over the next 12-18 months as the company moves past the margin trough of fiscal 2023.

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