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Stryker Corporation (SYK - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $2.54, which beat the Zacks Consensus Estimate of $2.38 by 6.7%. The bottom line also improved 12.9% year over year.
GAAP EPS was $1.93, up 12.2% from that recorded in the prior-year quarter.
Revenue Details
Revenues totaled $4.99 billion, which beat the Zacks Consensus Estimate of $4.83 billion by 3.4%. The top line also improved 11.2% on a year-over-year basis and 11.9% at constant currency (cc).
Revenues by Geography
Revenues in the United States amounted to $3.71 billion, up 12.1% from the prior-year quarter’s actual. International sales increased 8.7% to $1.29 billion and were up 11.5% year over year, excluding the negative impact of currency.
Segmental Analysis
MedSurg and Neurotechnology: This segment reported sales of $2.86 billion, up 12.2% year over year and 12.9% at cc. Sales growth was driven by increased unit volume as well as higher prices.
Orthopedics and Spine: Sales in the segment amounted to $2.14 billion, up 9.9% year over year and 10.6% at cc. This growth was driven by increased unit volume, partially offset by lower prices.
Margins
Adjusted gross profit totaled $3.19 billion in the reported quarter, up 12.2% from the year-ago quarter’s figure. Adjusted gross margin was 63.9%, up 60 basis points (bps).
Total operating expenses were $2.22 billion, up 7.9% from the year-ago quarter’s level.
Adjusted operating income totaled $1.22 billion, up 14.4% from that reported in the prior-year quarter. Adjusted operating margin was 24.3%, up 60 bps.
Financial Update
Strykerexited the second quarter with cash and cash equivalents of $1.48 billion compared with $1.67 billion in the preceding quarter.
Cumulative net cash provided by operating activities in the second quarter totaled $1.13 billion compared with $732 million a year ago.
2023 Guidance Raised
Stryker announced its updated guidance for 2023. The company now expects organic growth for total revenues in the 9.5-10.5% range, up from its previous expectation of 8-9%. The Zacks Consensus Estimate for total revenues is pegged at $19.99 billion.
SYK now expects adjusted EPS in the band of $10.25-$10.45, implying growth of 10.8% at the midpoint of the range. The Zacks Consensus Estimate is pegged at $10.16 for the same. The previously guided range was $10.05-$10.25.
The company expects unfavorable currency movement to hurt top-line growth and EPS by 0.3% and 5-10 cents, respectively, in 2023.
Stryker Corporation Price, Consensus and EPS Surprise
Stryker exited second-quarter 2023 on a strong note, wherein both earnings and revenues beat their respective Zacks Consensus Estimate. The company witnessed strong performance across its segments in the United States. Strong International sales also buoy optimism. It expects the momentum to continue into the second half of 2023 on the back of ongoing procedural recovery and a strong order book for capital equipment.
It is adopting several cost-cutting measures, including restructuring plans. Stryker’s prospects in 2023 seem promising on the back of strong customer demand for its existing products as well as new launches. The company’s guidance for earnings and revenues appears encouraging.
Moreover, the expansion in both gross and operating margins is reassuring. However, stiff competition in the MedTech space is a concern.
Zacks Rank
Stryker currently carries a Zacks Rank #2 (Buy).
Other Key Picks
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Revenues of $9.98 billion outpaced the consensus mark by 2.9%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.4%.
Elevance Health reported second-quarter 2023 adjusted EPS of $9.04, which beat the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. The company currently carries a Zacks Rank #2.
ELV has a long-term estimated growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.8%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the consensus mark by 1.4%. The company currently carries a Zacks Rank #2.
ISRG has a long-term estimated growth rate of 14.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.2%.
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Stryker (SYK) Q2 Earnings Beat Estimates, Volume Improves
Stryker Corporation (SYK - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $2.54, which beat the Zacks Consensus Estimate of $2.38 by 6.7%. The bottom line also improved 12.9% year over year.
GAAP EPS was $1.93, up 12.2% from that recorded in the prior-year quarter.
Revenue Details
Revenues totaled $4.99 billion, which beat the Zacks Consensus Estimate of $4.83 billion by 3.4%. The top line also improved 11.2% on a year-over-year basis and 11.9% at constant currency (cc).
Revenues by Geography
Revenues in the United States amounted to $3.71 billion, up 12.1% from the prior-year quarter’s actual. International sales increased 8.7% to $1.29 billion and were up 11.5% year over year, excluding the negative impact of currency.
Segmental Analysis
MedSurg and Neurotechnology: This segment reported sales of $2.86 billion, up 12.2% year over year and 12.9% at cc. Sales growth was driven by increased unit volume as well as higher prices.
Orthopedics and Spine: Sales in the segment amounted to $2.14 billion, up 9.9% year over year and 10.6% at cc. This growth was driven by increased unit volume, partially offset by lower prices.
Margins
Adjusted gross profit totaled $3.19 billion in the reported quarter, up 12.2% from the year-ago quarter’s figure. Adjusted gross margin was 63.9%, up 60 basis points (bps).
Total operating expenses were $2.22 billion, up 7.9% from the year-ago quarter’s level.
Adjusted operating income totaled $1.22 billion, up 14.4% from that reported in the prior-year quarter. Adjusted operating margin was 24.3%, up 60 bps.
Financial Update
Strykerexited the second quarter with cash and cash equivalents of $1.48 billion compared with $1.67 billion in the preceding quarter.
Cumulative net cash provided by operating activities in the second quarter totaled $1.13 billion compared with $732 million a year ago.
2023 Guidance Raised
Stryker announced its updated guidance for 2023. The company now expects organic growth for total revenues in the 9.5-10.5% range, up from its previous expectation of 8-9%. The Zacks Consensus Estimate for total revenues is pegged at $19.99 billion.
SYK now expects adjusted EPS in the band of $10.25-$10.45, implying growth of 10.8% at the midpoint of the range. The Zacks Consensus Estimate is pegged at $10.16 for the same. The previously guided range was $10.05-$10.25.
The company expects unfavorable currency movement to hurt top-line growth and EPS by 0.3% and 5-10 cents, respectively, in 2023.
Stryker Corporation Price, Consensus and EPS Surprise
Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation Quote
Wrapping Up
Stryker exited second-quarter 2023 on a strong note, wherein both earnings and revenues beat their respective Zacks Consensus Estimate. The company witnessed strong performance across its segments in the United States. Strong International sales also buoy optimism. It expects the momentum to continue into the second half of 2023 on the back of ongoing procedural recovery and a strong order book for capital equipment.
It is adopting several cost-cutting measures, including restructuring plans. Stryker’s prospects in 2023 seem promising on the back of strong customer demand for its existing products as well as new launches. The company’s guidance for earnings and revenues appears encouraging.
Moreover, the expansion in both gross and operating margins is reassuring. However, stiff competition in the MedTech space is a concern.
Zacks Rank
Stryker currently carries a Zacks Rank #2 (Buy).
Other Key Picks
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2 at present, reported second-quarter 2023 adjusted EPS of $1.08, which beat the Zacks Consensus Estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues of $9.98 billion outpaced the consensus mark by 2.9%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.4%.
Elevance Health reported second-quarter 2023 adjusted EPS of $9.04, which beat the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. The company currently carries a Zacks Rank #2.
ELV has a long-term estimated growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.8%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the consensus mark by 1.4%. The company currently carries a Zacks Rank #2.
ISRG has a long-term estimated growth rate of 14.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.2%.