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Stryker (SYK) Earnings and Revenues Miss Estimates in Q1

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Stryker Corporation SYK reported first-quarter 2021 adjusted earnings per share (EPS) of $1.93, which missed the Zacks Consensus Estimate of $1.98 by 2.5%. However, the bottom line improved 4.9% year over year.

Revenue Details

The Michigan-based medical device company reported revenues of $3.95 billion, which lagged the Zacks Consensus Estimate by 0.2%. Nonetheless, the top line increased 10.2% on a year-over-year basis and 8% at constant currency (cc).

Revenues by Geography

Revenues in United States were $2.78 billion, up 5.3% year over year. International sales were up 23.7% to $1.17 billion.

Segmental Analysis

Orthopaedics: In the quarter under review, revenues in the segment totaled $1.48 billion, up 21.4% year over year. The segment’s revenues rose 18.7% at cc. The upside can be attributed to strong performance at the Trauma and Extremities and Other sub segments, and growth in Mako.

MedSurg: This segment reported sales of $1.62 billion, which remained flat on year-over-year basis. Sales at the segment declined 1.6% at cc. Per management, the segment decreased 1.6% organically in the reported quarter.

Stryker Corporation Price, Consensus and EPS Surprise

Stryker Corporation Price, Consensus and EPS Surprise
Stryker Corporation Price, Consensus and EPS Surprise

Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation Quote

Neurotechnology and Spine: Sales in the segment amounted to $848 million, up 14% year over year and 11.3% at cc. Organically, the segment witnessed a rise of 11.3%. Per management, the upside can be attributed to double-digit growth in the company’s Interventional spine, neurosurgical and ENT businesses. Also, growth (27%) in Stryker’s neurovascular business contributed to the improvement.


In the first quarter, adjusted gross profit totaled $2.59 billion, up 10.5% from the year-ago quarter. Adjusted gross margin was 65.4%, up 10 basis points (bps).

Adjusted operating income amounted to $928 million, up 7.7% from the prior-year quarter. Adjusted operating margin was 23.5%, down 50 bps.

Financial Update

The company exited the first quarter with cash and cash equivalents of $2.24 billion, compared with $2.94 billion in the prior quarter.

Net cash provided by operating activities in the first quarter were $452 million, reflecting a decrease of 23.5% from the year-ago period.

2021 Outlook

The company will continue to track and evaluate the impact of the COVID-19 pandemic on its operations and financial results. With the ongoing recovery from the pandemic, Stryker anticipates organic net sales growth between 8% and 10% from that of 2019 (since 2019 reflects a more normal baseline compared to the variability witnessed throughout 2020).

Adjusted EPS is projected in the band of $9.05 to $9.30 (which includes impact of the buyout of Wright Medical for the full year). The Zacks Consensus Estimate for the same is pegged at $9.05.

Wrapping Up

Stryker exited first-quarter 2021 on a weak note, wherein both earnings and revenues missed the Zacks Consensus Estimate. Nonetheless, the company witnessed strong performance across Orthopaedics and Neurotechnology and Spine segments. Growth in international sales is also a positive. Further, expansion in gross margin in the reported quarter buoys optimism.

The company remains committed to continued advancement of its new product pipelines. Per management, it anticipates the momentum gained during the first quarter to sustain and is optimistic about the Wright Medical buyout that is progressing ahead of its expectations.

However, Stryker continues to grapple with pricing pressure. Also, contraction in operating margin is a negative. Stiff competition in the MedTech space also remains a concern.

Zacks Rank

Stryker currently carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks, which are expected to report earnings soon, are DENTSPLY SIRONA Inc. XRAY, The Cooper Companies, Inc. COO and Omnicell, Inc. OMCL, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

DENTSPLY SIRONA is set to release results on May 6. The Zacks Consensus Estimate for DENTSPLY SIRONA’s first-quarter 2021 adjusted EPS is pegged at 55 cents, suggesting growth of 27.9% from the year-ago quarter. The consensus mark for first-quarter revenues stands at $929.3 million, indicating year-over-year increase of 6.3%.

The Zacks Consensus Estimate for Cooper Companies’ fiscal second-quarter 2021 revenues is pegged at $685.2 million, suggesting year-over-year improvement of 30.5%. The same for EPS stands at $3.04, indicating growth of 101.3% from the year-ago reported figure.

The Zacks Consensus Estimate for Omnicell’s first-quarter 2021 EPS is currently pegged at 67 cents, indicating growth of 1.5% from the year-ago reported figure. The same for revenues stands at $245.4 million, indicating growth of 6.8% from the year-ago reported figure.

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