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Stryker Rallies 19.8% Year to Date: 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 19.8% compared with 10.8% growth of the industry. The S&P 500 Composite has risen 17.9% 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 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. Stryker’s recent strategic acquisitions also raise optimism about the stock.
Image Source: Zacks Investment Research
Catalysts Driving Stryker’s Growth
The rally in the company’s share price can be attributed to its robust robotic arm-assisted surgery platform, Mako, a solid product portfolio, along with some tactical acquisitions. The optimism led by a solid second-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Stryker exited the second quarter of fiscal 2024 on a strong note, wherein both earnings and revenues improved year over year. 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.
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 9-10% compared with the earlier guidance of 8.5-9.5%. For 2024, adjusted earnings per share (EPS) are now anticipated to be in the band of $11.90-$12.10, implying growth of 12% at the midpoint of the guided range. The company previously expected EPS in the range of $11.85-$12.05.
SYK also has a wide range of products to offer, for which the investors seem optimistic. Due to its broad spectrum of products, it is shielded from any notable decline in sales during challenging economic times. The company's extensive experience in medical robots, artificial intelligence, and mechatronics has allowed it to stay ahead of the curve in the MedTech space.
In August, SYK announced the launch of its Pangea Plating System, which received FDA clearance in late 2023. Pangea System is likely to provide variable-angle plating for a range of patient demographics, and its portfolio is both extensive and adaptable. With Pangea System on board, Stryker is now the go-to partner for all things trauma-related, including plates, nails, external fixation devices, and more, supported by the company’s committed staff and first-rate service.
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 June 4.
In addition to expanding organically, Stryker has bolstered its expansion by way of acquisitions. In August, the company entered into a definitive agreement to acquire Vertos Medical Inc., a privately held company providing a minimally invasive solution for treating chronic lower back pain caused by lumbar spinal stenosis.As a result of the acquisition, Stryker is set to expand its minimally invasive pain management portfolio with differentiated treatments and expand its reach across ambulatory surgery centers.
In the same month, Stryker entered into a definitive agreement to acquire care.ai, a privately held company specializing in artificial intelligence (AI)-assisted virtual care workflows, smart room technology and ambient intelligence solutions. 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.
Stryker’s Risk Factors
As Stryker continues to acquire a large number of companies, while this improves revenue opportunities, it is also likely to add to integration risks, putting gross and operating margins under pressure. Frequent acquisitions may impact 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 13.2% and 12.1% to $12.00 and $13.45 on a year-over-year basis, respectively. The Zacks Consensus Estimate for EPS for fiscal 2024 and 2025 has moved north by 5 cents and 7 cents, respectively, for the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 9.2% and 7.8%, respectively, to $22.37 billion and $24.12 billion on a year-over-year basis.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.
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Stryker Rallies 19.8% Year to Date: 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 19.8% compared with 10.8% growth of the industry. The S&P 500 Composite has risen 17.9% 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 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. Stryker’s recent strategic acquisitions also raise optimism about the stock.
Image Source: Zacks Investment Research
Catalysts Driving Stryker’s Growth
The rally in the company’s share price can be attributed to its robust robotic arm-assisted surgery platform, Mako, a solid product portfolio, along with some tactical acquisitions. The optimism led by a solid second-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Stryker exited the second quarter of fiscal 2024 on a strong note, wherein both earnings and revenues improved year over year. 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.
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 9-10% compared with the earlier guidance of 8.5-9.5%. For 2024, adjusted earnings per share (EPS) are now anticipated to be in the band of $11.90-$12.10, implying growth of 12% at the midpoint of the guided range. The company previously expected EPS in the range of $11.85-$12.05.
SYK also has a wide range of products to offer, for which the investors seem optimistic. Due to its broad spectrum of products, it is shielded from any notable decline in sales during challenging economic times. The company's extensive experience in medical robots, artificial intelligence, and mechatronics has allowed it to stay ahead of the curve in the MedTech space.
In August, SYK announced the launch of its Pangea Plating System, which received FDA clearance in late 2023. Pangea System is likely to provide variable-angle plating for a range of patient demographics, and its portfolio is both extensive and adaptable. With Pangea System on board, Stryker is now the go-to partner for all things trauma-related, including plates, nails, external fixation devices, and more, supported by the company’s committed staff and first-rate service.
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 June 4.
In addition to expanding organically, Stryker has bolstered its expansion by way of acquisitions. In August, the company entered into a definitive agreement to acquire Vertos Medical Inc., a privately held company providing a minimally invasive solution for treating chronic lower back pain caused by lumbar spinal stenosis.As a result of the acquisition, Stryker is set to expand its minimally invasive pain management portfolio with differentiated treatments and expand its reach across ambulatory surgery centers.
In the same month, Stryker entered into a definitive agreement to acquire care.ai, a privately held company specializing in artificial intelligence (AI)-assisted virtual care workflows, smart room technology and ambient intelligence solutions. 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.
Stryker’s Risk Factors
As Stryker continues to acquire a large number of companies, while this improves revenue opportunities, it is also likely to add to integration risks, putting gross and operating margins under pressure. Frequent acquisitions may impact 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 13.2% and 12.1% to $12.00 and $13.45 on a year-over-year basis, respectively. The Zacks Consensus Estimate for EPS for fiscal 2024 and 2025 has moved north by 5 cents and 7 cents, respectively, for the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 9.2% and 7.8%, respectively, to $22.37 billion and $24.12 billion on a year-over-year basis.
Stocks to Consider
Some better-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.