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Here's Why You Should Hold on to Stryker (SYK) Stock for Now
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Stryker Corporation (SYK - Free Report) is well-poised for growth, backed by a robust robotic-arm assisted surgery platform, Mako, and a diversified product portfolio. However, pricing pressure remains a headwind.
Shares of the Zacks Rank #3 (Hold) company have gained 6.8% against the industry’s decline of 15.3% in a year’s time. The S&P 500 Index has risen 12.1% in the same time frame.
Stryker, with a market capitalization of $100.14 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve by 9.2% in the next five years. Stryker’s earnings yield is 3.6% comparing favorably with the industry’s 0.4%.
What’s Favoring Growth?
Mako is Stryker’s robotic-arm assisted surgery platform. The company continues to witness strong demand for Mako and a healthy order book, courtesy of the platform’s unique features despite financial constraints stemming from the COVID-19 pandemic. This, in turn, positions it well to sustain momentum in robot sales and recon share market gains.
The company is committed to the continued expansion of Mako. In 2021, the company’s Mako installed base witnessed growth of 27% and currently has an installed base that is moving toward 1500 Mako robots. Thus, the company continues to focus on the continued expansion of Mako. This growth reflects the demand for Stryker’s differentiated Mako robotic technology.
For 2022, the company’s Mako order book remains solid and is in sync with its aim of sustained share gain in both hips and knees.
Image Source: Zacks Investment Research
Additionally, Stryker has a diversified product portfolio. Its wide range of products shields the company against any significant sales shortfall during economic turmoil. Its significant exposure to robotics, Artificial Intelligence for health care and Medical Mechatronics has helped the company stay ahead of the curve in the MedTech space. Stryker’s portfolio includes products like Hip, Knee and Mako robotic-arm assisted surgeries.
In September 2021, the company’s Trauma & Extremities division introduced a Citrelock Tendon Fixation Device System, which offers surgeons a differentiated design through a tendon thread featuring Citregen — a resorbable technology. Citregen, in particular, has chemical and mechanical qualities intended for orthopedic surgical applications.
Per management, the company’s sustained support for customers and focus on innovation poise it for growth as the pandemic eventually subsides. In the fourth quarter of 2021, Stryker’s adjusted R&D expenses accounted for 6.4% of net sales, which highlights its sustained commitment to innovation. Per management, this is likely to drive new product launches.
What’s Hurting the Stock?
An unfavorable pricing environment poses a persistent threat to Stryker’s core businesses. It is important to note here that 2021 had the same number of selling days as 2019 and one less selling day compared to 2020. In comparison to 2019, the two-year impact from pricing in the fourth quarter was 1.7% on the company’s top line (0.8% compared with fourth-quarter 2020). Consequently, pricing pressure remains a concern.
Estimates Trend
The Zacks Consensus Estimate for 2022 earnings per share is pegged at $9.75, suggesting growth of 7.3% from 2021. The consensus mark for 2022 revenues stands at $18.29 billion, indicating an improvement of 6.9% from the previous year.
Stocks to Consider
Some better-ranked stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 39.3% against the industry’s decline of 54.1% over the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 13.9%. EW’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 6.5%.
Edwards Lifesciences has gained 40.8% compared with the industry’s 1.5% growth over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 27.1% compared with the industry’s rally of 8.3% over the past year.
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Here's Why You Should Hold on to Stryker (SYK) Stock for Now
Stryker Corporation (SYK - Free Report) is well-poised for growth, backed by a robust robotic-arm assisted surgery platform, Mako, and a diversified product portfolio. However, pricing pressure remains a headwind.
Shares of the Zacks Rank #3 (Hold) company have gained 6.8% against the industry’s decline of 15.3% in a year’s time. The S&P 500 Index has risen 12.1% in the same time frame.
Stryker, with a market capitalization of $100.14 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve by 9.2% in the next five years. Stryker’s earnings yield is 3.6% comparing favorably with the industry’s 0.4%.
What’s Favoring Growth?
Mako is Stryker’s robotic-arm assisted surgery platform. The company continues to witness strong demand for Mako and a healthy order book, courtesy of the platform’s unique features despite financial constraints stemming from the COVID-19 pandemic. This, in turn, positions it well to sustain momentum in robot sales and recon share market gains.
The company is committed to the continued expansion of Mako. In 2021, the company’s Mako installed base witnessed growth of 27% and currently has an installed base that is moving toward 1500 Mako robots. Thus, the company continues to focus on the continued expansion of Mako. This growth reflects the demand for Stryker’s differentiated Mako robotic technology.
For 2022, the company’s Mako order book remains solid and is in sync with its aim of sustained share gain in both hips and knees.
Image Source: Zacks Investment Research
Additionally, Stryker has a diversified product portfolio. Its wide range of products shields the company against any significant sales shortfall during economic turmoil. Its significant exposure to robotics, Artificial Intelligence for health care and Medical Mechatronics has helped the company stay ahead of the curve in the MedTech space. Stryker’s portfolio includes products like Hip, Knee and Mako robotic-arm assisted surgeries.
In September 2021, the company’s Trauma & Extremities division introduced a Citrelock Tendon Fixation Device System, which offers surgeons a differentiated design through a tendon thread featuring Citregen — a resorbable technology. Citregen, in particular, has chemical and mechanical qualities intended for orthopedic surgical applications.
Per management, the company’s sustained support for customers and focus on innovation poise it for growth as the pandemic eventually subsides. In the fourth quarter of 2021, Stryker’s adjusted R&D expenses accounted for 6.4% of net sales, which highlights its sustained commitment to innovation. Per management, this is likely to drive new product launches.
What’s Hurting the Stock?
An unfavorable pricing environment poses a persistent threat to Stryker’s core businesses. It is important to note here that 2021 had the same number of selling days as 2019 and one less selling day compared to 2020. In comparison to 2019, the two-year impact from pricing in the fourth quarter was 1.7% on the company’s top line (0.8% compared with fourth-quarter 2020). Consequently, pricing pressure remains a concern.
Estimates Trend
The Zacks Consensus Estimate for 2022 earnings per share is pegged at $9.75, suggesting growth of 7.3% from 2021. The consensus mark for 2022 revenues stands at $18.29 billion, indicating an improvement of 6.9% from the previous year.
Stocks to Consider
Some better-ranked stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 39.3% against the industry’s decline of 54.1% over the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 13.9%. EW’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 6.5%.
Edwards Lifesciences has gained 40.8% compared with the industry’s 1.5% growth over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 27.1% compared with the industry’s rally of 8.3% over the past year.