Zimmer Biomet's (ZBH) sales force productivity improvements, stable end markets and continued focus on buybacks remain supportive, though the quarter was weighed by transition-related execution and guidance concerns, RBC Capital Markets said.

The company is undergoing go-to-market model adjustments in the US, shifts in emerging markets, aggressive investments in innovation and significant talent and sales force changes. Management categorized 2026 as a "year of transition" and held off on raising full-year revenue guidance despite a "strong" Q1, the brokerage said Tuesday in a note.

RBC believes the recent 10% stock decline reflects a lack of core business beat and raise. It also points to concerns over earnings quality, given that most of the EPS beat was driven by a tariff refund. In addition, unchanged revenue guidance implies lower numbers in Q2 to Q4.

The firm said the market is also focused on 2027 margin and EPS growth, especially given this year's tariff refund benefit. 2026 guidance has room for a beat and raise, driven by US sales force transition benefits, new product launches and organic growth contribution from Paragon 28 starting in Q2.

RBC models 2026 sales of $8.56 billion, near the top end of Zimmer's 1% to 3% growth guidance. It also expects EPS of $8.48, implying 3.5% growth, impacted by acquisition-related dilution and the tariff benefit this year.

RBC maintained an outperform rating on Zimmer Biomet with a price target of $101.

Shares of Zimmer were down 2.5% in Wednesday trading.

Price: 80.76, Change: -2.04, Percent Change: -2.46