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Stryker (SYK) Q1 Earnings and Revenues Surpass Estimates
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Stryker Corporation (SYK - Free Report) reported first-quarter 2020 adjusted earnings per share (EPS) of $1.84, which beat the Zacks Consensus Estimate of $1.69 by 8.9%. However, the bottom line declined 2.1% year over year due to the impact of the COVID-19 pandemic.
The Michigan-based medical device company reported revenues of $3.59 billion, which surpassed the Zacks Consensus Estimate by 5.4%. The top line improved 2% on a year-over-year basis and 2.4% at constant currency (cc).
Revenues by Geography
Revenues in United States came in at $2.64 billion, up 2.5% year over year. International sales were up 0.8% to $945 million.
U.S. organic sales improved 2% and international organic sales rose 3.3%. While solid performance across Orthopaedics, MedSurg and Neurotechnology segments drove growth in the United States, favorable performance in Japan, Canada and smaller countries in Europe and emerging markets led to higher international organic sales.
Stryker Corporation Price, Consensus and EPS Surprise
Orthopaedic: In the quarter under review, revenues in the segment totaled $1.22 billion, down 2.1% year over year. The segment’s revenues declined 1.2% at cc. The downside can be attributed to weak performance at the Knees, Hips and Trauma and Extremities sub segments.
MedSurg: This segment reported sales of $1.62 billion, up 6.2% year over year. Sales at the segment increased 7% at cc. Per management, the segment improved 6.3% organically in the reported quarter, led by strong Instruments, Sustainability and Medical performances.
Neurotechnology and Spine: Sales in the segment amounted to $744 million, up 0.7% year over year and 1.5% at cc. Organically, the segment witnessed growth of 0.3%. Per management, the upside was driven by solid performance by the neurotech product lines.
Margins
In the first quarter, adjusted gross profit totaled $2.34 billion, up 1.3% from the year-ago quarter. Adjusted gross margin was 65.3%, down 50 basis points (bps).
Adjusted operating income amounted to $862 million, down 2.2% from the prior-year quarter. Adjusted operating margin was 24%, down 110 bps.
Financial Update
Cash and cash equivalents came in at $3.96 billion, down 8.6% from the year-end 2019.
Net cash provided by operating activities in the first quarter came in at $591 million, which soaring 88.8% from the year-ago period.
2020 Outlook
Due to the uncertainty surrounding the magnitude and duration of the COVID-19 pandemic, and the timing of global recovery and economic normalization, the company is unable to project the overall impact on its operations and financial results. Consequently, the company is not providing second-quarter or full-year 2020 organic sales or earnings outlook.
Wrapping Up
Stryker exited first-quarter 2020 on a strong note, with both earnings and revenues beating their respective consensus mark. The company continues to gain from its core MedSurg unit that put up a strong show in the reported quarter. Moreover, solid performance by the neurotech product lines drove the core Neurotechnology & Spine unit in the quarter under review. Solid international growth also buoys optimism.
However, Stryker continues to grapple with pricing pressure. Stiff competition in the MedTech space also remains a concern. Further, contraction in both gross and operating margins in the quarter raises concern.
The Zacks Consensus Estimate for Exact Sciences’s first-quarter 2020 revenues is pegged at $350.2 million, suggesting a whopping year-over-year improvement of 116.1%. The same for EPS stands at a loss of 60 cents, indicating an improvement of 9.1% from the prior-year quarter.
The Zacks Consensus Estimate for Aphria’s fourth-quarter fiscal 2020 revenues is $100.3 million, suggesting growth of 4.4% from the year-earlier reported figure.
The Zacks Consensus Estimate for Pacific Biosciences’ first-quarter 2020 revenues is pegged at $20.1 million, suggesting year-over-year improvement of 22.3%. The same for loss stands at 15 cents, indicating year-over-year improvement of 25%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Stryker (SYK) Q1 Earnings and Revenues Surpass Estimates
Stryker Corporation (SYK - Free Report) reported first-quarter 2020 adjusted earnings per share (EPS) of $1.84, which beat the Zacks Consensus Estimate of $1.69 by 8.9%. However, the bottom line declined 2.1% year over year due to the impact of the COVID-19 pandemic.
The Michigan-based medical device company reported revenues of $3.59 billion, which surpassed the Zacks Consensus Estimate by 5.4%. The top line improved 2% on a year-over-year basis and 2.4% at constant currency (cc).
Revenues by Geography
Revenues in United States came in at $2.64 billion, up 2.5% year over year. International sales were up 0.8% to $945 million.
U.S. organic sales improved 2% and international organic sales rose 3.3%. While solid performance across Orthopaedics, MedSurg and Neurotechnology segments drove growth in the United States, favorable performance in Japan, Canada and smaller countries in Europe and emerging markets led to higher international organic sales.
Stryker Corporation Price, Consensus and EPS Surprise
Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation Quote
Segmental Analysis
Orthopaedic: In the quarter under review, revenues in the segment totaled $1.22 billion, down 2.1% year over year. The segment’s revenues declined 1.2% at cc. The downside can be attributed to weak performance at the Knees, Hips and Trauma and Extremities sub segments.
MedSurg: This segment reported sales of $1.62 billion, up 6.2% year over year. Sales at the segment increased 7% at cc. Per management, the segment improved 6.3% organically in the reported quarter, led by strong Instruments, Sustainability and Medical performances.
Neurotechnology and Spine: Sales in the segment amounted to $744 million, up 0.7% year over year and 1.5% at cc. Organically, the segment witnessed growth of 0.3%. Per management, the upside was driven by solid performance by the neurotech product lines.
Margins
In the first quarter, adjusted gross profit totaled $2.34 billion, up 1.3% from the year-ago quarter. Adjusted gross margin was 65.3%, down 50 basis points (bps).
Adjusted operating income amounted to $862 million, down 2.2% from the prior-year quarter. Adjusted operating margin was 24%, down 110 bps.
Financial Update
Cash and cash equivalents came in at $3.96 billion, down 8.6% from the year-end 2019.
Net cash provided by operating activities in the first quarter came in at $591 million, which soaring 88.8% from the year-ago period.
2020 Outlook
Due to the uncertainty surrounding the magnitude and duration of the COVID-19 pandemic, and the timing of global recovery and economic normalization, the company is unable to project the overall impact on its operations and financial results. Consequently, the company is not providing second-quarter or full-year 2020 organic sales or earnings outlook.
Wrapping Up
Stryker exited first-quarter 2020 on a strong note, with both earnings and revenues beating their respective consensus mark. The company continues to gain from its core MedSurg unit that put up a strong show in the reported quarter. Moreover, solid performance by the neurotech product lines drove the core Neurotechnology & Spine unit in the quarter under review. Solid international growth also buoys optimism.
However, Stryker continues to grapple with pricing pressure. Stiff competition in the MedTech space also remains a concern. Further, contraction in both gross and operating margins in the quarter raises concern.
Zacks Rank
Stryker currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the broader medical space are Exact Sciences Corporation (EXAS - Free Report) , Aphria Inc. and Pacific Biosciences of California, Inc. (PACB - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Exact Sciences’s first-quarter 2020 revenues is pegged at $350.2 million, suggesting a whopping year-over-year improvement of 116.1%. The same for EPS stands at a loss of 60 cents, indicating an improvement of 9.1% from the prior-year quarter.
The Zacks Consensus Estimate for Aphria’s fourth-quarter fiscal 2020 revenues is $100.3 million, suggesting growth of 4.4% from the year-earlier reported figure.
The Zacks Consensus Estimate for Pacific Biosciences’ first-quarter 2020 revenues is pegged at $20.1 million, suggesting year-over-year improvement of 22.3%. The same for loss stands at 15 cents, indicating year-over-year improvement of 25%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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