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Is It Too Late To Consider Buying Stryker Corporation (NYSE:SYK)?

Simply Wall St

Stryker Corporation (NYSE:SYK) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on Stryker’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Stryker

What's the opportunity in Stryker?

The stock is currently trading at US$214 on the share market, which means it is overvalued by 30.93% compared to my intrinsic value of $163.53. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Stryker’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Stryker generate?

NYSE:SYK Past and Future Earnings, August 26th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -10.0% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Stryker. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? If you believe SYK should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on SYK for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Stryker. You can find everything you need to know about Stryker in the latest infographic research report. If you are no longer interested in Stryker, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.