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We expect medical technology producer Stryker Corporation (SYK - Analyst Report) to beat expectations when it reports 2014-first-quarter operating results on April 23.

Why a Likely Positive Surprise?

Our proven model shows that Stryker is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Expected Surprise Prediction or Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Stryker has a Zacks ESP of +0.93%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: Stryker carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of Stryker's Zacks Rank #3 (Hold) and +0.93% ESP makes us confident of a possible positive earnings beat on April 23.

What is Driving the Better-than-Expected Earnings?

Stryker had reported impressive results for the 2013-fourth-quarter. Stryker's net revenues increased 5.6% to $2.5 billion, which in turn caused the company's earnings to rise 7.9% year over year to $1.23 per share in the reported quarter, beating the Zacks Consensus Estimate by a penny.

The acquisition of MAKO Surgical by Stryker is expected to improve physician's ability to simplify joint reconstruction procedures. Management believes that this acquisition has provided Stryker a big opportunity for earnings growth and reinforced its competitive position in the global reconstructive market.

In the fourth quarter, Stryker's research and development expenses increased 10 basis points to $139 million. This reflects Stryker's commitment to invest in areas which will enable the company to deliver above-market sales growth in each of its key product categories

Based on its solid performance in the past quarter, Stryker's Board of directors increased the company's quarterly dividend by 15% over the prior year to 30.5 cents per share. The dividend is payable on April 30, 2014

Other Stocks to Consider

Stryker is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

Myriad Genetics Inc. (MYGN - Analyst Report), earnings ESP of +10.87% and a Zacks Rank #1 (Strong Buy).

Affymetrix, Inc. (AFFX - Analyst Report), earnings ESP of +50.00% and a Zacks Rank #2 (Buy).

Edwards Lifesciences Corp. (EW - Analyst Report), earnings ESP of +1.47% and a Zacks Rank #2 (Buy).

Read the Full Research Report on SYK
Read the Full Research Report on EW
Read the Full Research Report on AFFX
Read the Full Research Report on MYGN


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