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Here's Why You Should Add Stryker (SYK) Stock to Your Portfolio
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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 concern.
Shares of this Zacks Rank #2 (Buy) company have risen 21.6% compared with the industry’s 3.6% growth so far this year. The S&P 500 Index has gained 16.9% in the same time frame.
Stryker, with a market capitalization of $112.89 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve 9.4% in the next five years. SYK’s earnings yield of 3.4% compares favorably with the industry’s (3.1%).
Image Source: Zacks Investment Research
What’s Favoring Stryker’s Growth?
Stryker continues to witness strong demand for Mako and a healthy order book amid recovery in procedure-demand following the COVID-19 pandemic. This is due to the platform’s unique and promising features. These developments, in turn, enable the company to sustain the momentum in robotic-treatment sales.
SYK is committed to the continued expansion of Mako, whose installations touched record high during the fourth quarter. It remains confident about robust growth in Mako revenues in 2023, on the back of new launches and software upgrades. The first-quarter results reflected Stryker’s efforts to promote the advanced surgery platform.
The company is focused on continued expansion of Mako and progressing well with it in international markets. The initiatives reflect the demand for Stryker’s unique arm-assisted robotic technology.
SYK also boasts a diversified product portfolio. Its wide range of products protects it against any significant sales shortfall during economic turmoil.
Stryker’s significant exposure to robotics and artificial intelligence for healthcare and Medical Mechatronics have helped it to stay ahead of the curve in the MedTech space. The company’s portfolio includes Mako as well as products for hip and knee surgeries.
On its first-quarter earnings call, Stryker stated that procedural volumes continue to recover in most countries after getting adversely affected last year due to COVID-19. Although hospital staffing pressure remains in certain regions, the company expects this problem to resolve gradually. This improvement, in turn, will likely lead to higher procedures in 2023.
Per management, Stryker’s constant support for customers and focus on innovation poise it for growth as the effect of the pandemic subsides. In first-quarter 2023, its adjusted research and development expenses were 6.5% of net sales, highlighting its strong commitment to innovation. According to the company, this is likely to drive new product launches.
In September 2022, SYK launched a new Spine Guidance Software — Q Guidance System — for spine application. The Q Guidance system has shown promising launch uptake during the first quarter.
Moreover, Stryker’s cost-cutting initiatives to improve margins and lessen inflationary pressure look promising. The adjusted selling, general and administrative expenses during first-quarter 2023 were 35.6% of net sales, expanding 40 basis points year over year.
What’s Hurting the Stock?
An unfavorable currency rate fluctuation poses a persistent threat to Stryker’s core businesses. Foreign currency had a 2.2% unfavorable impact on sales during the first quarter. The trend is likely to continue in the second half of 2023. The company is also facing inflationary pressure, leading to lower margins.
Estimate Trend
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $10.16, indicating year-over-year growth of 8.8%. The same for revenues is pinned at $19.95 billion, implying an 8.1% improvement year over year.
Alcon has an estimated long-term growth rate of 14.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.85%.
ALC’s shares haverallied 18.3% year to date compared with the industry’s 8.8% growth.
DexCom has an estimated long-term growth rate of 40.4%. Its earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 15.19%.
DXCM’s shares have risen 12.8% year to date compared with the industry’s 8.8% growth.
Hologic has an estimated earnings growth rate of 4.1% for fiscal 2024. HOLX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 27.32%.
HOLX’s shares have gained 6.8% year to date compared with the industry’s 8.8% growth.
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Here's Why You Should Add Stryker (SYK) Stock to Your Portfolio
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 concern.
Shares of this Zacks Rank #2 (Buy) company have risen 21.6% compared with the industry’s 3.6% growth so far this year. The S&P 500 Index has gained 16.9% in the same time frame.
Stryker, with a market capitalization of $112.89 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve 9.4% in the next five years. SYK’s earnings yield of 3.4% compares favorably with the industry’s (3.1%).
Image Source: Zacks Investment Research
What’s Favoring Stryker’s Growth?
Stryker continues to witness strong demand for Mako and a healthy order book amid recovery in procedure-demand following the COVID-19 pandemic. This is due to the platform’s unique and promising features. These developments, in turn, enable the company to sustain the momentum in robotic-treatment sales.
SYK is committed to the continued expansion of Mako, whose installations touched record high during the fourth quarter. It remains confident about robust growth in Mako revenues in 2023, on the back of new launches and software upgrades. The first-quarter results reflected Stryker’s efforts to promote the advanced surgery platform.
The company is focused on continued expansion of Mako and progressing well with it in international markets. The initiatives reflect the demand for Stryker’s unique arm-assisted robotic technology.
SYK also boasts a diversified product portfolio. Its wide range of products protects it against any significant sales shortfall during economic turmoil.
Stryker’s significant exposure to robotics and artificial intelligence for healthcare and Medical Mechatronics have helped it to stay ahead of the curve in the MedTech space. The company’s portfolio includes Mako as well as products for hip and knee surgeries.
On its first-quarter earnings call, Stryker stated that procedural volumes continue to recover in most countries after getting adversely affected last year due to COVID-19. Although hospital staffing pressure remains in certain regions, the company expects this problem to resolve gradually. This improvement, in turn, will likely lead to higher procedures in 2023.
Per management, Stryker’s constant support for customers and focus on innovation poise it for growth as the effect of the pandemic subsides. In first-quarter 2023, its adjusted research and development expenses were 6.5% of net sales, highlighting its strong commitment to innovation. According to the company, this is likely to drive new product launches.
In September 2022, SYK launched a new Spine Guidance Software — Q Guidance System — for spine application. The Q Guidance system has shown promising launch uptake during the first quarter.
Moreover, Stryker’s cost-cutting initiatives to improve margins and lessen inflationary pressure look promising. The adjusted selling, general and administrative expenses during first-quarter 2023 were 35.6% of net sales, expanding 40 basis points year over year.
What’s Hurting the Stock?
An unfavorable currency rate fluctuation poses a persistent threat to Stryker’s core businesses. Foreign currency had a 2.2% unfavorable impact on sales during the first quarter. The trend is likely to continue in the second half of 2023. The company is also facing inflationary pressure, leading to lower margins.
Estimate Trend
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $10.16, indicating year-over-year growth of 8.8%. The same for revenues is pinned at $19.95 billion, implying an 8.1% improvement year over year.
Stryker Corporation Price
Stryker Corporation price | Stryker Corporation Quote
Other Stocks to Consider
Some other top-ranked stocks from the broader medical space are Alcon (ALC - Free Report) , DexCom (DXCM - Free Report) and Hologic (HOLX - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alcon has an estimated long-term growth rate of 14.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.85%.
ALC’s shares haverallied 18.3% year to date compared with the industry’s 8.8% growth.
DexCom has an estimated long-term growth rate of 40.4%. Its earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 15.19%.
DXCM’s shares have risen 12.8% year to date compared with the industry’s 8.8% growth.
Hologic has an estimated earnings growth rate of 4.1% for fiscal 2024. HOLX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 27.32%.
HOLX’s shares have gained 6.8% year to date compared with the industry’s 8.8% growth.