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Stryker (SYK) Q1 Earnings and Revenues Surpass Estimates

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·4 min read
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Stryker Corporation SYK reported first-quarter 2022 adjusted earnings per share (EPS) of $1.97, which beat the Zacks Consensus Estimate of $1.93 by 2.1%. The bottom line improved 2.1% from the year-ago figure.

GAAP EPS in the quarter was 84 cents, up 6.3% from the prior-year quarter.

Revenue Details

The Michigan-based medical device company reported revenues of $4.28 billion, which surpassed the Zacks Consensus Estimate by 1.8%. The top line improved 8.1% on a year-over-year basis and 9.9% at constant currency (cc).

Revenues by Geography

Revenues in the United States were $3.11 billion, up 11.5% year over year. International sales were up 0.1% to $1.17 billion.

Segmental Analysis

Effective from Dec 31, 2021, Stryker has updated its reportable business segments to align to its new internal reporting structure.

MedSurg and Neurotechnology: This segment reported sales of $2.42 billion, which improved 10.6% on a year-over-year basis. Sales at the segment rose 12.1% at cc. Improvement across all its sub segments contributed to the upside. Per management, the segment saw 10.8% organic growth 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

Orthopaedics and Spine: Sales in the segment amounted to $1.85 billion, up 5.1% year over year and 7.2% at cc. The upside can be attributed to strength in Trauma and Extremities, Hips and Knees sub segments, and strong demand for Mako.

Margins

In the first quarter, adjusted gross profit totaled $2.74 billion, up 5.9% from the year-ago quarter. Adjusted gross margin was 64.1%, down 130 basis points (bps).

Total operating expenses were $2.29 billion, up 11.6% from the year-ago quarter.

Adjusted operating income amounted to $934 million, up 0.6% from the prior-year quarter. Adjusted operating margin was 21.8%, down 170 bps.

Financial Update

The company exited the first quarter with cash and cash equivalents of $1.46 billion, compared with $2.94 billion in the preceding quarter.

Net cash provided by operating activities in the first quarter was $203 million, compared with $452 million in the year-ago period.

2022 Outlook

Taking into consideration the first-quarter performance, dynamic supply chain pressures, uncertainty stemming from the COVID-19 pandemic and solid orders for capital equipment, Stryker now anticipates organic net sales toward the high end of the range of 6% to 8%.

Adjusted EPS is projected to be in the lower end of the band of $9.60 to $10. The Zacks Consensus Estimate for the same stands at $9.72.

Wrapping Up

Stryker exited first-quarter 2022 on a strong note, wherein both earnings and revenues beat their estimates. The company witnessed strong performance across the segments. Growth in international sales is an added positive.
Per management, despite the COVID-19 led disruptions, the company managed to deliver robust growth in both of its businesses.

However, contraction in both gross and operating margins is disappointing. Stryker continues to grapple with pricing pressure. Stiff competition in the MedTech space remains a concern.

Zacks Rank

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

Key Picks

Some better-ranked stocks in the broader medical space that have announced quarterly results are Qiagen N.V. QGEN, UnitedHealth Group Incorporated UNH and Alkermes plc ALKS.

Qiagen, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 80 cents, which beat the Zacks Consensus Estimate by 12.7%. Revenues of $628.4 million outpaced the consensus mark by 6.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Qiagen has an estimated long-term growth rate of 11.5%. QGEN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.7%.

UnitedHealth, carrying a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. First-quarter revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 23.8%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.


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