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Why Is Stryker (SYK) Up 8.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Stryker (SYK - Free Report) . Shares have added about 8.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Stryker due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Stryker reported second-quarter 2024 adjusted earnings per share (EPS) of $2.81, which beat the Zacks Consensus Estimate of $2.79 by 0.7%. The bottom line also improved 10.6% year over year.
GAAP EPS was $2.14, up 10.9% from the year-ago quarter’s level.
Revenue Details
Revenues totaled $5.42 billion, which beat the Zacks Consensus Estimate by 0.3%. The top line also improved 8.5% on a year-over-year basis and 9.4% at constant currency (cc).
Revenues by Geography
Revenues in the United States amounted to $4.05 billion, up 9.1% from the prior year quarter. International sales increased 7% year over year to $1.38 billion.
Segmental Analysis
MedSurg and Neurotechnology: This segment reported sales of $3.12 billion, up 9% year over year and 9.8% at cc. Sales growth was driven by increased unit volume as well as higher prices.
Orthopedics and Spine: Sales in the segment amounted to $2.31 billion, up 7.9% year over year and 8.9% at cc. This growth was driven by increased unit volume, partially offset by lower prices.
In the quarter, MedSurg and Neurotechnology recorded organic sales growth of 9.7%, which included 10.1% of U.S. organic growth and 8.2% of international organic growth. Instruments recorded U.S. organic sales growth of 11.9% led by strong double-digit growth in the surgical technologies business.
Margins
Adjusted gross profit totaled $3.48 billion in the reported quarter, up 8.8% from the year-ago quarter’s level. Adjusted gross margin was 64.2%, up 35 basis points (bps).
Total operating expenses were $2.37 billion, up 6.7% from the year-ago quarter’s level.
Adjusted operating income totaled $1.33 billion, up 9% from a year ago. Adjusted operating margin was 24.6%, up 26 bps.
Financial Update
Stryker exited the second quarter with cash and cash equivalents of $1.96 billion compared with $2.41 billion at the end of the first quarter of 2024.
Cumulative net cash provided by operating activities totaled $837 million compared with $1.13 billion a year ago.
2024 Guidance
Stryker updated its guidance for 2024. The company now expects total revenues to grow in the range of 9.0% to 10.0% on an organic basis compared with the earlier guidance of 8.5-9.5%. The Zacks Consensus Estimate for total revenues is pegged at $22.3 billion, implying growth of 8.9%. Based on the steady progress of the company’s pricing actions, it expects a favorable pricing impact of approximately 0.5%.
SYK expects adjusted EPS in the band of $11.90 to $12.10, implying growth of 12% at the midpoint of the guided range. The Zacks Consensus Estimate for earnings is pegged at $11.95 per share. The company previously expected earnings in the range of $11.85-$12.05 per share.
If foreign exchange rates hold near current levels, the company anticipates a moderately unfavorable impact on full-year net sales.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Stryker has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stryker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Stryker is part of the Zacks Medical - Products industry. Over the past month, Royal Philips (PHG - Free Report) , a stock from the same industry, has gained 8.8%. The company reported its results for the quarter ended June 2024 more than a month ago.
Philips reported revenues of $4.8 billion in the last reported quarter, representing a year-over-year change of -1.3%. EPS of $0.32 for the same period compares with $0.31 a year ago.
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Why Is Stryker (SYK) Up 8.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Stryker (SYK - Free Report) . Shares have added about 8.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Stryker due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Stryker's Q2 Earnings Beat Estimates, Guidance Raised
Stryker reported second-quarter 2024 adjusted earnings per share (EPS) of $2.81, which beat the Zacks Consensus Estimate of $2.79 by 0.7%. The bottom line also improved 10.6% year over year.
GAAP EPS was $2.14, up 10.9% from the year-ago quarter’s level.
Revenue Details
Revenues totaled $5.42 billion, which beat the Zacks Consensus Estimate by 0.3%. The top line also improved 8.5% on a year-over-year basis and 9.4% at constant currency (cc).
Revenues by Geography
Revenues in the United States amounted to $4.05 billion, up 9.1% from the prior year quarter. International sales increased 7% year over year to $1.38 billion.
Segmental Analysis
MedSurg and Neurotechnology: This segment reported sales of $3.12 billion, up 9% year over year and 9.8% at cc. Sales growth was driven by increased unit volume as well as higher prices.
Orthopedics and Spine: Sales in the segment amounted to $2.31 billion, up 7.9% year over year and 8.9% at cc. This growth was driven by increased unit volume, partially offset by lower prices.
In the quarter, MedSurg and Neurotechnology recorded organic sales growth of 9.7%, which included 10.1% of U.S. organic growth and 8.2% of international organic growth. Instruments recorded U.S. organic sales growth of 11.9% led by strong double-digit growth in the surgical technologies business.
Margins
Adjusted gross profit totaled $3.48 billion in the reported quarter, up 8.8% from the year-ago quarter’s level. Adjusted gross margin was 64.2%, up 35 basis points (bps).
Total operating expenses were $2.37 billion, up 6.7% from the year-ago quarter’s level.
Adjusted operating income totaled $1.33 billion, up 9% from a year ago. Adjusted operating margin was 24.6%, up 26 bps.
Financial Update
Stryker exited the second quarter with cash and cash equivalents of $1.96 billion compared with $2.41 billion at the end of the first quarter of 2024.
Cumulative net cash provided by operating activities totaled $837 million compared with $1.13 billion a year ago.
2024 Guidance
Stryker updated its guidance for 2024. The company now expects total revenues to grow in the range of 9.0% to 10.0% on an organic basis compared with the earlier guidance of 8.5-9.5%. The Zacks Consensus Estimate for total revenues is pegged at $22.3 billion, implying growth of 8.9%. Based on the steady progress of the company’s pricing actions, it expects a favorable pricing impact of approximately 0.5%.
SYK expects adjusted EPS in the band of $11.90 to $12.10, implying growth of 12% at the midpoint of the guided range. The Zacks Consensus Estimate for earnings is pegged at $11.95 per share. The company previously expected earnings in the range of $11.85-$12.05 per share.
If foreign exchange rates hold near current levels, the company anticipates a moderately unfavorable impact on full-year net sales.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Stryker has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stryker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Stryker is part of the Zacks Medical - Products industry. Over the past month, Royal Philips (PHG - Free Report) , a stock from the same industry, has gained 8.8%. The company reported its results for the quarter ended June 2024 more than a month ago.
Philips reported revenues of $4.8 billion in the last reported quarter, representing a year-over-year change of -1.3%. EPS of $0.32 for the same period compares with $0.31 a year ago.