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Stryker (SYK) Scales a New 52-Week High on Solid Prospects

Zacks Equity Research

Share price of Stryker Corporation SYK scaled a new 52-week high of $196.27 on Mar 19, closing nominally lower at $196.12. The company has gained 12.4% over the past six months versus its industry’s 5.2% decline. Stryker also fared well in comparison to the S&P 500’s decline of 3%.

The company has a market cap of $73.08 billion.

Further, Stryker’s estimate revision trend for the current year is favorable. In the past 30 days, two estimates moved up while none moved in the opposite direction. Consequently, estimates were up 0.12% to $8.12 a share.

The company has a trailing four-quarter average positive earnings surprise of 2.18%.

The company’s five-year historical growth rate is favorable at 10.90% as compared with the industry’s 8.30% and the S&P 500’s 4.40%.

Stryker currently has a Zacks Rank #2 (Buy). The company has an impressive Growth Style Score of B. Our Growth Style Score highlights all the vital metrics of a company’s financials to obtain a clearer picture of the quality and sustainability of its growth. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 offer the best investment opportunities.

Growth Drivers

The key growth-driving factor for Stryker in the past year has been increasing net sales from each of its three major business segments.

Stryker Corporation Price


Stryker Corporation Price | Stryker Corporation Quote

Of late, revenues at the Orthopaedic segment are growing steadily. The segment’s organic growth has been led by Trauma and Extremities and the knees business. Sustained momentum in Mako Total Knee Platform, on account of rising global installation of robots, is also contributing to growth.

In the last two sequential quarters, the company’s MedSurg segment registered robust growth on strong performances by the Endoscopy, Instruments and Medical sub-segments.

Within U.S. Endoscopy, sports medicine, communications and ProCare businesses are seeing solid growth. In the second half of 2018, growth in the U.S. Medical sub-segment was led by strong sales in EMS and Sage businesses. Growth in the U.S. Instrument sector was buoyed by terrific performance of the waste management surgical account and surgical power businesses.

In the last two reported quarters, sales within the Neurotechnology and Spine segments registered double-digit growth rates. The revenue growth can be attributed to K2M acquisition and consistently strong demand in Europe, China and Japan. Growth in the U.S. Neurotech business was driven by robust demand for the company’ hemorrhagic, ischemic stroke, CMF and Neuro Powered instruments.Thespine segment saw double-digit growth in its IVF business and Tritanium implant products.

In March, Stryker announced the closure of the acquisition of OrthoSpace, Ltd., an Israeli company specializing in the treatment of rotator cuffs. In February, the company had announced the completion of the deal for the takeover of Arrinex, Inc., a medical device company that has developed a technology for the treatment of chronic rhinitis. The acquisition of K2M group holdings, a key global player in spinal treatment, has been a crucial growth driver for Stryker. Markets seem to be upbeat about these recent strategic investments by the company.

We believe these factors have lifted the stock to a 52-week high.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Varian, Inc., VAR, Penumbra, Inc., PEN and Masimo, Inc. MASI. Notably, each of these stocks currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Varian’s long-term earnings growth rate is projected to be 8%

Penumbra’s long-term earnings growth rate is projected at 20.93%.

Masimo’s long-term earnings are projected to grow 15.60%.

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