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Here's Why You Should Retain Stryker (SYK) Stock Right Now
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Stryker Corporation (SYK - Free Report) is well-poised for growth backed by a robust robotic-arm assisted surgery platform, Mako, and a diversified product portfolio. However, pricing pressure remains a headwind.
Shares of the Zacks Rank #3 (Hold) company have gained 11.7% against the industry’s decline of 6.4% in a year’s time. The S&P 500 Index has risen 26.8% in the same time frame.
Stryker, with a market capitalization of $102.70 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve by 9.1% in the next five years. Stryker’s earnings yield is 3.7% comparing favorably with the industry’s (0.1%).
What’s Favoring Growth?
Mako is Stryker’s robotic-arm assisted surgery platform. The company continues to witness strong demand for Mako and a healthy order book, courtesy of the platform’s unique features despite financial constraints stemming from the COVID-19 pandemic. This, in turn, positions it well to sustain momentum in robot sales and recon share market gains.
The company is committed to the continued expansion of Mako. This growth reflects the demand for Stryker’s differentiated Mako robotic technology. This momentum continued in the first half of 2021 as well, with advancement in the international markets and the third quarter was no exception.
Image Source: Zacks Investment Research
For 2021, the company’s Mako order book remains solid, and is in sync with its aim of sustained share gain in both hips and knees.
Additionally, Stryker has a diversified product portfolio. Its wide range of products shields the company against any significant sales shortfall during economic turmoil. Its significant exposure in robotics, Artificial Intelligence for health care and Medical Mechatronics has helped the company stay ahead of the curve in the MedTech space. Stryker’s portfolio includes products like Hip, Knee and Mako robotic-arm assisted surgeries.
In September, 2021, the company’s Trauma & Extremities division introduced a Citrelock Tendon Fixation Device System, which offers surgeons a differentiated design through a tendon thread featuring Citregen — a resorbable technology. Citregen, in particular, has chemical and mechanical qualities intended for orthopedic surgical applications.
Per management, the company’s sustained support for customers and focus on innovation will position it well for growth, as the pandemic eventually subsides. In the third quarter of 2021, Stryker’s adjusted R&D expenses were 6.7% of net sales, which highlights its sustained commitment to innovation. Per management, this is likely to drive new product launches.
What’s Hurting the Stock?
An unfavorable pricing environment poses a persistent threat to Stryker’s core businesses. It is important to note here that the second quarter of 2021 had the same number of selling days as the third quarter of 2019 and 2020. In comparison to 2019, pricing in the third quarter had an impact of 2.2% on the company’s top line (0.7% compared with third-quarter 2020). Consequently, pricing pressure remains a cause of concern.
Estimates Trend
The Zacks Consensus Estimate for 2022 earnings per share is pegged at $9.11, suggesting growth of 22.6% from 2021. The consensus mark for 2022 revenues stands at $18.28 billion, indicating an improvement of 733% from the previous year.
Stocks to Consider
Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. (TMO - Free Report) , Abiomed, Inc. and Laboratory Corporation of America Holdings (LH - Free Report) .
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
Abiomed beat earnings estimates in each of the trailing four quarters, the average surprise being 5.8%. The company currently carries a Zacks Rank #2.
Abiomed’s long-term earnings growth rate is estimated at 20%. The company’s earnings yield of 1.2% compares favorably with the industry’s (3.6%).
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. The company currently sports a Zacks Rank #1.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. The company’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.
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Here's Why You Should Retain Stryker (SYK) Stock Right Now
Stryker Corporation (SYK - Free Report) is well-poised for growth backed by a robust robotic-arm assisted surgery platform, Mako, and a diversified product portfolio. However, pricing pressure remains a headwind.
Shares of the Zacks Rank #3 (Hold) company have gained 11.7% against the industry’s decline of 6.4% in a year’s time. The S&P 500 Index has risen 26.8% in the same time frame.
Stryker, with a market capitalization of $102.70 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve by 9.1% in the next five years. Stryker’s earnings yield is 3.7% comparing favorably with the industry’s (0.1%).
What’s Favoring Growth?
Mako is Stryker’s robotic-arm assisted surgery platform. The company continues to witness strong demand for Mako and a healthy order book, courtesy of the platform’s unique features despite financial constraints stemming from the COVID-19 pandemic. This, in turn, positions it well to sustain momentum in robot sales and recon share market gains.
The company is committed to the continued expansion of Mako. This growth reflects the demand for Stryker’s differentiated Mako robotic technology. This momentum continued in the first half of 2021 as well, with advancement in the international markets and the third quarter was no exception.
For 2021, the company’s Mako order book remains solid, and is in sync with its aim of sustained share gain in both hips and knees.
Additionally, Stryker has a diversified product portfolio. Its wide range of products shields the company against any significant sales shortfall during economic turmoil. Its significant exposure in robotics, Artificial Intelligence for health care and Medical Mechatronics has helped the company stay ahead of the curve in the MedTech space. Stryker’s portfolio includes products like Hip, Knee and Mako robotic-arm assisted surgeries.
In September, 2021, the company’s Trauma & Extremities division introduced a Citrelock Tendon Fixation Device System, which offers surgeons a differentiated design through a tendon thread featuring Citregen — a resorbable technology. Citregen, in particular, has chemical and mechanical qualities intended for orthopedic surgical applications.
Per management, the company’s sustained support for customers and focus on innovation will position it well for growth, as the pandemic eventually subsides. In the third quarter of 2021, Stryker’s adjusted R&D expenses were 6.7% of net sales, which highlights its sustained commitment to innovation. Per management, this is likely to drive new product launches.
What’s Hurting the Stock?
An unfavorable pricing environment poses a persistent threat to Stryker’s core businesses. It is important to note here that the second quarter of 2021 had the same number of selling days as the third quarter of 2019 and 2020. In comparison to 2019, pricing in the third quarter had an impact of 2.2% on the company’s top line (0.7% compared with third-quarter 2020). Consequently, pricing pressure remains a cause of concern.
Estimates Trend
The Zacks Consensus Estimate for 2022 earnings per share is pegged at $9.11, suggesting growth of 22.6% from 2021. The consensus mark for 2022 revenues stands at $18.28 billion, indicating an improvement of 733% from the previous year.
Stocks to Consider
Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. (TMO - Free Report) , Abiomed, Inc. and Laboratory Corporation of America Holdings (LH - Free Report) .
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
Abiomed beat earnings estimates in each of the trailing four quarters, the average surprise being 5.8%. The company currently carries a Zacks Rank #2.
Abiomed’s long-term earnings growth rate is estimated at 20%. The company’s earnings yield of 1.2% compares favorably with the industry’s (3.6%).
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. The company currently sports a Zacks Rank #1.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. The company’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.