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Stryker (SYK) Gains 11.6% YTD: What's Driving the Stock?
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Stryker Corporation (SYK - Free Report) witnessed substantial gains in the year-to-date period. Shares of the company have rallied 11.6% compared with 1.7% growth of the industry. The S&P 500 Composite has risen 17.5% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its 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. The company’s prospects in 2024 seem promising on the back of strong customer demand for its existing products as well as new launches.
Image Source: Zacks Investment Research
Catalysts Driving Growth
The rally in the company’s share price can be attributed to its robust robotic arm-assisted surgery platform, Mako, and a diversified product portfolio. The optimism led by a solid first-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Stryker exited the first quarter of 2024 on a strong note, wherein both earnings and revenues improved year over over. The company witnessed a strong performance in the U.S. market, notably in Instruments, Medical, Endoscopy, Trauma and Extremities, and Mako, which is likely to have aided in the stock’s price growth.
Revenues in the MedSurg and Neurotechnologysegment were up 11.5% year over year and 12% at constant currency (cc). The segment’s performance was driven by increased unit volume and higher prices. Revenues in the Orthopedics and Spine segment were up 7.5% year over year and 8% at cc. Growth in the segment was driven by increased unit volume, partially offset by lower prices.
SYK has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, the company now expects organic growth for total revenues in the range of 8.5-9.5% compared with the earlier guidance of 7.5-9.0%. For 2024, adjusted earnings per share (EPS) is now anticipated to be in the band of $11.85-$12.05, implying growth of 12.7% at the midpoint of the guided range. The company previously expected EPS in the range of $11.7-$12.
SYK also has a wide range of products to offer. Due to its extensive product line, it is shielded from any significant dip in sales during difficult economic times. The company has been able to keep ahead of the curve in the MedTech area thanks to its strong exposure to medical Mechatronics, robotics and artificial intelligence.
In June, Stryker announced the launch of its latest device in the market, offering advanced technology, the LIFEPAK 35 monitor/defibrillator. The device is likely to enable more efficient workflow and provide advanced clinical solutions to emergency responders and healthcare professionals. The company also launched the Gamma4 Hip Fracture Nailing System in Germany on Jun 4.
In addition to expanding organically, Stryker has bolstered its expansion by way of acquisitions. In June, the company entered into a definitive agreement to acquire Artelon, a privately held company that specializes in innovative soft tissue fixation products for foot and ankle and sports medicine procedures.
Risk Factors
A negative change in exchange rates is a constant threat to SYK's core operations. The first quarter of 2024 saw a 0.5% negative impact on sales due to foreign exchange. 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 12.7% and 11.9% to $11.95 and $13.38 on a year-over-year basis, respectively. The Zacks Consensus Estimate for EPS for fiscal 2024 and 2025 has remained stable for the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 8.9% and 7.4%, respectively, to $22.31 billion and $23.98 billion on a year-over-year basis.
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita (DVA - Free Report) , Ecolab (ECL - Free Report) and Universal Health Services (UHS - Free Report) .
DaVita, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.6%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 44% compared with the industry’s 20.4% growth in the past year.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 1.7%.
Ecolab’s shares have gained 33.8% against the industry’s 9.3% decline in the past year.
Universal Health Services has an Earnings ESP of +2.91% and a Zacks Rank of 2, at present. UHS has an estimated earnings growth rate of 30.5% for 2024.
UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.12%.
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Stryker (SYK) Gains 11.6% YTD: What's Driving the Stock?
Stryker Corporation (SYK - Free Report) witnessed substantial gains in the year-to-date period. Shares of the company have rallied 11.6% compared with 1.7% growth of the industry. The S&P 500 Composite has risen 17.5% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its 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. The company’s prospects in 2024 seem promising on the back of strong customer demand for its existing products as well as new launches.
Image Source: Zacks Investment Research
Catalysts Driving Growth
The rally in the company’s share price can be attributed to its robust robotic arm-assisted surgery platform, Mako, and a diversified product portfolio. The optimism led by a solid first-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Stryker exited the first quarter of 2024 on a strong note, wherein both earnings and revenues improved year over over. The company witnessed a strong performance in the U.S. market, notably in Instruments, Medical, Endoscopy, Trauma and Extremities, and Mako, which is likely to have aided in the stock’s price growth.
Revenues in the MedSurg and Neurotechnologysegment were up 11.5% year over year and 12% at constant currency (cc). The segment’s performance was driven by increased unit volume and higher prices. Revenues in the Orthopedics and Spine segment were up 7.5% year over year and 8% at cc. Growth in the segment was driven by increased unit volume, partially offset by lower prices.
SYK has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, the company now expects organic growth for total revenues in the range of 8.5-9.5% compared with the earlier guidance of 7.5-9.0%. For 2024, adjusted earnings per share (EPS) is now anticipated to be in the band of $11.85-$12.05, implying growth of 12.7% at the midpoint of the guided range. The company previously expected EPS in the range of $11.7-$12.
SYK also has a wide range of products to offer. Due to its extensive product line, it is shielded from any significant dip in sales during difficult economic times. The company has been able to keep ahead of the curve in the MedTech area thanks to its strong exposure to medical Mechatronics, robotics and artificial intelligence.
In June, Stryker announced the launch of its latest device in the market, offering advanced technology, the LIFEPAK 35 monitor/defibrillator. The device is likely to enable more efficient workflow and provide advanced clinical solutions to emergency responders and healthcare professionals. The company also launched the Gamma4 Hip Fracture Nailing System in Germany on Jun 4.
In addition to expanding organically, Stryker has bolstered its expansion by way of acquisitions. In June, the company entered into a definitive agreement to acquire Artelon, a privately held company that specializes in innovative soft tissue fixation products for foot and ankle and sports medicine procedures.
Risk Factors
A negative change in exchange rates is a constant threat to SYK's core operations. The first quarter of 2024 saw a 0.5% negative impact on sales due to foreign exchange. 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 12.7% and 11.9% to $11.95 and $13.38 on a year-over-year basis, respectively. The Zacks Consensus Estimate for EPS for fiscal 2024 and 2025 has remained stable for the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 8.9% and 7.4%, respectively, to $22.31 billion and $23.98 billion on a year-over-year basis.
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space that have announced quarterly results are DaVita (DVA - Free Report) , Ecolab (ECL - Free Report) and Universal Health Services (UHS - Free Report) .
DaVita, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.6%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 44% compared with the industry’s 20.4% growth in the past year.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 1.7%.
Ecolab’s shares have gained 33.8% against the industry’s 9.3% decline in the past year.
Universal Health Services has an Earnings ESP of +2.91% and a Zacks Rank of 2, at present. UHS has an estimated earnings growth rate of 30.5% for 2024.
UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.12%.