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Here's Why You Should Hold on to Stryker (SYK) Stock Now

Zacks Equity Research

Stryker Corporation SYK is well poised for growth on the back of solid international improvement, diversified product portfolio and acquisition-driven strategy. However, pricing pressure remains a concern.

The stock currently carries a Zacks Rank #3 (Hold).

Price Performance

Shares of Stryker have gained 26.5%, outperforming the industry’s growth of 14.4% on a year-to-date basis. Moreover, the stock outpaced the S&P 500 Index’s rally of 15.2%.



What’s Deterring the Stock?

An unfavorable pricing environment continues to weigh on Stryker’s core businesses. The company’s top line has also been adversely affected by such pressure and we expect this to continue in the near term as well.

Factors to Boost Stryker

A robust and diversified product portfolio with the exposure to robotics, AI for health care and Medical Mechatronics has helped Stryker to gain a competitive edge in the MedTech space. In fact, a wide range of products makes the company immune to any significant sales shortfall during economic downturns.

Moreover, focus on international growth has proven to be beneficial for the company. A substantial turnaround in the company’s European business owing to its effective restructuring measures reflects a potential upside.

On the back of an acquisition-driven strategy, the company has been bolstering growth profile over a considerable period of time. Moreover, its K2M acquisition drove the core Neurotechnology & Spine unit in the last reported quarter.

Expansion in operating margin is a positive while strong outlook for 2019 is indicative of bright prospects.

Which Way Are Estimates Headed?

For 2019, the Zacks Consensus Estimate for revenues is pegged at $14.80 billion, indicating an improvement of 8.8% from the year-ago period. For adjusted earnings per share, the same is pinned at $8.15, suggesting growth of 11.5% year-ago reported figure.

Key Picks

Some better-ranked stocks from the broader medical space are Cardiovascular Systems, Inc. CSII, Oxford Immunotec Global PLC OXFD and Haemonetics Corporation HAE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardiovascular Systems has earnings growth rate for fiscal fourth quarter of 2019 of 33.3%.

Oxford Immunotec has a long-term earnings growth rate of 25%.

Haemonetics has a long-term earnings growth rate 13.5%.

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Oxford Immunotec Global PLC (OXFD) : Free Stock Analysis Report
 
Haemonetics Corporation (HAE) : Free Stock Analysis Report
 
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Cardiovascular Systems, Inc. (CSII) : Free Stock Analysis Report
 
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