Stryker's (SYK) Preliminary Results Hint at In-Line Q4 Sales
Stryker Corporation SYK recently announced preliminary results for fourth quarter and full-year 2015, per which net sales are expected to be in line with the Zacks Consensus Estimate.
In addition, Stryker raised its full-year adjusted earnings per share (EPS) guidance. Adjusted EPS is now expected to lie in the band of $5.09–$5.12, as compared to the previous range of $5.07–$5.12. Adjusted EPS growth rate on a year-over-year basis is projected at 7.6%–8.2%. Unfavorable foreign exchange rate is expected to create a headwind of 4 cents in the fourth quarter of 2015.
Stryker anticipates net sales increase of 3.7% on a year-over-year basis to $2.7 million in the fourth quarter of 2015. Excluding the effect of foreign exchange rate and acquisitions, net sales are expected to exhibit a growth rate of 6.4%. Organic growth for full-year 2015 is expected to be 6.1%.
Sales in the U.S. are expected to be $2 billion in the fourth quarter of 2015, reflecting a year-over-year increase of 8.4%. International sales, on the other hand, are estimated to decline 6.9% (up 3.7% at constant currency) to $744 million.
Sales from the Orthopedics segment are expected to increase 3.3% to $1.1 billion. Sales of the company’s MAKO RIO Robotic Arm Interactive System are expected to total 31 units in the fourth quarter of 2015, compared to 20 in the year-ago quarter. Excluding the impact of acquisitions, sales are estimated to jump 7.1% at constant currency.
MedSurg sales are anticipated to be roughly $1.1 billion in the fourth quarter, indicating an increase of 3%. In constant currency and excluding the impact of acquisitions, sales are expected to improve 4.2%.
Neurotechnology and Spine sales are estimated at around $483 million, representing an improvement of 6.5%. At constant currency and excluding the impact of acquisitions, sales are projected to rise 9.9%.
Stryker bought back shares worth $700 million in 2015, with remaining open authorization of $1.9 billion.
We believe that strong growth momentum at the Trauma & Extremities, Spine and Neurotechnology businesses will help drive top-line growth in the near term. Growing adoption of MAKO will also boost sales in the orthopedic and reconstructive surgery market. However, a strong U.S. dollar will continue to hurt sales in the near term.
Zacks Rank & Stocks to Consider
Currently, Stryker carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the medical space are Exactech EXAC, DexCom DXCM and Fresenius Medical Care FMS. While Exactech sports a Zacks Rank #1 (Strong Buy), both DexCom and Fresenius Medical Care have a Zacks Rank #2 (Buy).
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