Globus Medical [GMED] — Valuation

Analysis date: 2026-07-29 · Framework: Criteria, 2026-07-29 · Method: references/valuation.md Spot: $80.64 (Alpaca IEX daily close, 2026-07-28)

Two outputs are produced, over two horizons. Neither replaces the other.

1. Verified inputs

Every input re-derived from primary filings. The five screen errors and their corrections are documented in GMED_Research.md §1; the corrected values are used throughout and are not silently substituted.

Q4'25 quarterly figures are derived as FY2025 less the disclosed nine-month figures — GMED, like all US registrants, does not file a Q4 10-Q. FY2025 revenue $2,938.9m − 9M $2,112.5m = $826.4m; FY2025 operating income $479.8m − 9M $310.5m = $169.3m.

2. Implied-path test — the Valuation Criteria

2.1 Anchoring the exit multiple — GROWTH_MATCHED

valuation.md: "An exit multiple may only be drawn from a comparator set whose growth brackets the subject's growth at the exit year."

The screen's 35.2x anchor fails this test and is discarded. It was drawn from a comparator band centred on GMED's reported 42.2% CAGR, which is acquisition-driven (see Research §2.1). GMED's business will not be growing 42% in year 5; it is growing ~9–13% organically now, and the FY2026 guide implies ~8.5%. Anchoring a 5-year exit multiple to a growth rate the business has never delivered organically is precisely the defect the rule exists to close.

Comparator set: US-listed medtech, growth bracketing 6–14%, positive EBIT. Drawn from the 129-name Tier-1 universe (reports/scan_v2), restricted to medical technology — hospital operators, drug distributors and managed care were excluded because a 1%-EBIT-margin distributor's EV/EBIT is not a device multiple.

The set spans 7.3%–12.9% growth, which brackets the 8.5%–13.2% organic range GMED is currently delivering and the ~8.5% its own FY2026 guidance implies. Basis: GROWTH_MATCHED.

Base exit multiple: 20.0x. Set below the comparator median of 22.5x, and the reason is stated separately as the rule requires: a 22.5x exit would embed multiple expansion from GMED's current 19.0x traded EV/EBIT, which is an assumption, not a valuation. 20.0x sits (i) above the lowest stated anchor (RMD 16.5x), so it does not fall below every anchor; (ii) essentially at today's traded multiple, so the test does not smuggle in a re-rating; and (iii) inside the comparator range throughout. Implied compression from today's 19.0x traded EV/EBIT: −1.0x, i.e. a 5.3% multiple expansion, not a compression. Stated as a number because the spec requires it, and flagged as the direction that makes the test less conservative — hence the sensitivity below runs down to 14.0x.

2.2 Terminal margin

20.0%, held fixed. Basis: - Own, demonstrated: Q1 2026 GAAP operating margin 19.8% ($150.4m / $759.9m) — already there for a quarter. TTM 17.2%. FY2025 16.3%. - Sector peer median: 18.6% (set above). - Base-business Adjusted EBITDA margin is 33.4% and rose 4.2pp in FY2025 (Research §3), which is the D&A-inclusive corroboration that the EBIT path is not an extrapolation.

Consistent with the max(own, sector peer median) convention. 20.0% is 0.2pp above the best quarter the company has actually printed — it is not a heroic assumption, and the sensitivity in §2.4 shows the answer is far more exposed to the multiple than to the margin.

2.3 The test

python3 reverse_dcf.py --spot 80.64 --shares 135.745 --net-cash 799.3 \
    --revenue 3100.6 --years 5 --wacc 0.10 \
    --terminal-margin 0.200 --exit-multiple 20.0

Parameters held fixed: horizon 5 years; WACC 10.0%; terminal EBIT margin 20.0%; exit multiple 20.0x EV/EBIT; share count 135.745m; net cash $799.3m; starting revenue $3,100.6m. Solved for: revenue CAGR.

Terminal value is 100% of the modelled EV by construction (the instrument is a terminal-multiple reverse DCF), which is why the reverse DCF is the primary long-horizon output here and the sensitivity is run on the multiple, never on scenario probabilities.

The same test at the other two available definitions of "demonstrated":

The TTM organic figure is used because it is the most recent full-year measure of what the business does without buying revenue, and because it happens to coincide with what management's own guidance implies. The two-year stack, at +5.6%, is the honest bear read and it produces a margin of essentially zero. That is disclosed, not buried: the pass is thin and it is thin in a specific, identifiable way.

2.4 Sensitivity over the exit multiple (mandatory — never over scenario probabilities)

Terminal margin held at 20.0%, WACC at 10.0%, revenue at $3,100.6m, horizon 5 years.

The whole answer lives in the exit multiple, and the flip point is 17.5x. Above it the price is achievable on demonstrated organic growth; below it, it is not. 17.5x sits between ResMed (16.5x) and LivaNova (21.3x) — squarely inside the plausible range, not at its edge. This is a genuinely marginal pass and the memo says so.

2.5 Reconciliation: why the screen said +34.6pp and this says +2.8pp

Sequential bridge, each change applied on top of the last (so the deltas tie exactly):

(The batch brief quoted +34.6pp / 7.6% required from a different scan vintage; this worktree's reports/scan_v2/GMED_analysis.json carries +42.0pp / 0.2% required. Both are reconciled to the same +2.8pp.)

Two errors did all the work, and they are the same error twice: treating acquired revenue as demonstrated organic capability (−33.7pp), and then anchoring the exit multiple to that same acquired growth rate (−11.3pp). Together they account for 45pp of a 39pp total correction; the data errors (TTM, net cash, margin) run the other way and are worth +5.7pp combined. The screen's headline was not caused by bad data. It was caused by counting M&A as organic capability, and then compounding that mistake through the multiple.

3. The 12-month target

Built per valuation.md: near-term estimates + named product-cycle events, multiple anchored on GMED's own trading history with the percentile stated. Not a DCF; not a peer median projected forward.

3.1 Near-term revenue base

No Street consensus was obtainable — Alpha Vantage EARNINGS_ESTIMATES quota was exhausted on the analysis date. The base is therefore the company's own guidance for FY2026 and a house extension for FY2027, both labelled. No consensus figure is quoted or invented.

The named product-cycle events inside the 12-month window that move this base — each carries a date in GMED_Catalyst_Calendar.md: - Q2 2026 results (~6 Aug 2026) — the test of whether base-business growth holds double-digit against the first hard comp (Q2'25 was +3.3%, still an easy one; Q3'25 at +7.0% is the first real test, in November). - Enabling Technologies capital cycle — two quarters of ~+20% off a −8.4% year; a third confirms the inflection, and ET carries the highest revenue-per-placement of the portfolio. - Nevro integration exit rate — whether the −8% TTM decline stabilises. Every $10m quarterly swing is ~1.3pp on group growth. - FY2027 guidance (~late Feb 2027) — the first management statement about the post-rebound growth rate, and the single largest re-rating or de-rating event in the window.

3.2 Multiple — anchored on GMED's own history

Daily EV/Sales series built on as-known TTM revenue (each quarter's revenue stepped in at its actual filing date, so the series is not forward-looking), with the current verified share count and net cash held constant so the series measures multiple movement.

Annual mean EV/Sales: 2021 10.62x · 2022 8.42x · 2023 6.41x · 2024 4.31x · 2025 3.38x · 2026 YTD 3.69x.

A five-year, uninterrupted de-rating from 10.6x to 3.3x, with 2026 the first year to tick up.

Target multiple: 3.70x EV/Sales. That is the 2026 year-to-date mean and approximately the 45th percentile of the post-NuVasive era — a partial, not a full, mean-reversion to the post-merger median of 4.00x. The reason for the haircut is stated: a full return to 4.00x requires evidence that the organic acceleration survives the harder comps, and that evidence does not exist yet. The post-NuVasive window is used as the reference regime rather than the full five years because the company doubled in size in September 2023; the 2021 multiples belong to a different, half-sized, pre-merger business. Both percentiles are reported so the choice is visible.

3.3 The target

Cross-check on earnings, not used to set the target: $100 is 21.1x the FY2026 guided non-GAAP EPS midpoint of $4.75, and ~18.2x a house FY2027E of ~$5.50 (FY2025 actual $3.98, +30.8%; FY2026 guided +19.3% at the midpoint, guide raised twice). GMED currently trades at 17.0x FY2026 guided EPS. An 18–21x forward multiple for a medtech compounding EPS at ~20% is undemanding against a comparator set at a 22.5x EV/EBIT median.

Sanity band against the external reference. The professional reference book carries a $62 target (−23%). The gap to this memo's $100 is $38, or 61% of the reference target — very wide, and it is explained rather than split:

• Their target requires GMED to be a ~5% organic grower whose multiple stays at ~2.5–2.8x EV/Sales, near the bottom decile of its own history. That is internally coherent — it is essentially the downside case in GMED_Research.md §8, to which this memo assigns 30%.
• This memo's target requires the disclosed five-quarter organic acceleration to persist at ~10% and the multiple to recover to its own 2026 mean. Neither requires anything the company has not already printed.
• The disagreement is about one number — the durable organic growth rate — not about method. It is resolvable, on a date, by the Q2 and Q3 2026 prints.

Per valuation.md, the external target is used as a check on the output, never as a calibration target for the model. No parameter was tuned toward it.

4. Summary