Stryker Corporation SYK has witnessed substantial gains in the year-to-date period. Shares of the company have rallied 30.2% compared with 14.5% growth of the industry. The S&P 500 Composite has risen 27.2% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for investors at the moment.
Headquartered in Kalamazoo, MI, Stryker is one of the world’s largest medical device companies operating in the global orthopedic market. The company has three business segments — Orthopaedics, MedSurg and Neurotechnology & Spine.
Strength in Stryker’s flagship Mako Total Knee Platform, which enables surgeons to do pre-operative planning and precise surgeries, looks promising. The company is also adopting several cost-cutting measures, including restructuring plans. Its prospects seem promising on the back of strong customer demand for its existing products and new launches. Stryker’s recent acquisitions also raise optimism about the stock.
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Catalysts for Stryker's Growth
The surge in the company's share price can be attributed to its advanced robotic arm-assisted surgery platform, Mako, a strong product lineup and strategic acquisitions. The positive sentiment, driven by a solid third-quarter fiscal 2024 performance and promising business potential, is expected to continue aiding it.
Stryker exited third-quarter 2024 on a strong note, wherein earnings and revenues beat the Zacks Consensus Estimate. The company witnessed a strong performance in the U.S. market, notably in Instruments, Medical, Endoscopy, Trauma and Extremities and Mako. Strong International sales also buoyed optimism and are likely to have boosted the stock price.
SYK has increased its revenue and earnings forecasts for fiscal 2024, likely attracting investors’ interest. The company now anticipates organic revenue growth of 9.5-10% for fiscal 2024, up from the previous guidance of 9%-10%. Adjusted earnings per share (EPS) for 2024 are now expected to be between $12.00 and $12.10 compared with the earlier projection of $11.90-$12.10.
SYK's extensive product range has also garnered investor optimism. Its broad product spectrum shields it from significant sales declines during economic downturns. The company's vast experience in medical robotics, artificial intelligence (AI) and mechatronics has kept it at the forefront of the MedTech industry.
In November, SYK unveiled the Oculan Lighting Platform, an innovative lighting solution designed to provide consistent, high-quality illumination, allowing surgeons to focus on delivering the highest standard of care. In the same month, SYK also announced the launch of the next generation of SurgiCount+ within its sponge management portfolio. SurgiCount+, integrated with Stryker’s Triton technology, is likely to provide solutions for retained surgical sponges and blood-loss assessment.
In August, SYK launched the Pangea Plating System, which received FDA clearance in late 2023. The Pangea System offers variable-angle plating for diverse patient demographics with a comprehensive and adaptable portfolio. With the Pangea System, Stryker has become a key partner for trauma-related products, including plates, nails and external fixation devices, supported by dedicated staff and excellent service.
In addition to expanding organically, Stryker has bolstered its expansion by way of acquisitions. In October, the company completed the buyout of Vertos Medical, a privately held company providing a minimally invasive solution for treating chronic lower back pain caused by lumbar spinal stenosis, to expand its minimally invasive pain management portfolio. In September, SYK closed the acquisition of NICO Corporation, a privately held company providing a systematic approach to minimally invasive surgery for tumor and intracerebral hemorrhage procedures.
SYK also announced the completion of the acquisition of MOLLI Surgical Inc., a privately held company specializing in the development of wire-free soft tissue localization technology for breast-conserving surgery, in August. In July, Stryker completed the previously announced acquisition of Artelon, a privately held company specializing in innovative soft tissue fixation products for foot and ankle and sports medicine procedures.
Risk Factors
As Stryker continues to acquire a large number of companies, which improves revenue opportunities, it is also likely to add to integration risks, putting gross and operating margins under pressure. Frequent acquisitions may affect the company’s balance sheet in the form of a high level of goodwill and intangible assets.
A negative change in exchange rates is also a threat to SYK's core operations. The trend is likely to continue for the rest of 2024, though, at a slower pace. The company is also facing inflationary pressure, leading to lower margins.
A Look at Estimates
SYK’s EPS for fiscal 2024 and 2025 is projected to increase 13.8% and 12.3% to $12.06 and $13.55 on a year-over-year basis, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has increased 1 cent and 2 cents, respectively, over the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 9.8% and 8.3%, respectively, to $22.51 billion and $24.39 billion on a year-over-year basis.
Stocks to Consider
Some better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 10.4% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 37.2% year to date compared with the industry’s 6.7% growth.
AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 8.9% year to date against the industry’s 6.7% growth.
Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 56.5% year to date compared with the industry’s 6.7% growth.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>AngioDynamics, Inc. (ANGO) : Free Stock Analysis Report
Stryker Corporation (SYK) : Free Stock Analysis Report
Masimo Corporation (MASI) : Free Stock Analysis Report
Globus Medical, Inc. (GMED) : Free Stock Analysis Report
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