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Stryker's (SYK) Q2 Earnings and Revenues Miss Estimates
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Stryker Corporation (SYK - Free Report) reported second-quarter 2022 adjusted earnings per share (EPS) of $2.25, which missed the Zacks Consensus Estimate of $2.27 by 0.9%. The bottom line was flat year over year.
GAAP EPS in the quarter was $1.72, up 11% from the prior-year quarter.
Revenue Details
This Michigan-based medical device company reported revenues of $4.49 billion, which missed the Zacks Consensus Estimate of $4.53 billion by 0.9%. The top line, however, improved 4.6% on a year-over-year basis and 7.6% at constant currency (cc).
Revenues by Geography
Revenues in the United States were $3.31 billion, up 6.8% year over year. However, International sales were down 1% to $1.18 billion.
Segmental Analysis
Effective from Dec 31, 2021, Stryker updated its reportable business segments to align with its new internal reporting structure.
MedSurg and Neurotechnology: This segment reported sales of $2.55 billion, which improved 8% on a year-over-year basis. Sales at the segment rose 10.6% at cc. Improvement in volumes of products contributed to the upside, partially offset by lower prices. Per management, the segment saw 7.9% organic growth in the reported quarter.
Orthopaedics and Spine: Sales in the segment amounted to $1.94 billion, up 0.5% year over year and 3.9% at cc. The upside can be attributed to strength in the Hips and Knees sub-segments, partially offset by lower sales in Spine sub-segments and other products.
Stryker Corporation Price, Consensus and EPS Surprise
In the second quarter, adjusted gross profit totaled $2.84 billion, up 0.4% from the year-ago quarter. The adjusted gross margin was 63.3%, down 270 basis points (bps).
Total operating expenses were $2.05 billion, up 0.7% from the year-ago quarter.
Adjusted operating income amounted to $1.06 billion, down 4.3% from the prior-year quarter. The adjusted operating margin was 23.7%, down 220 bps.
Financial Update
The company exited the second quarter with cash and cash equivalents of $1.04 billion, compared with $1.46 billion in the preceding quarter.
Cumulative net cash provided by operating activities in the second quarter was $732 million, compared with $1.33 billion in the year-ago period.
2022 Outlook
Stryker raised its outlook for revenue growth in 2022, considering its strong order book for capital equipment and the sales momentum in the implant businesses. The company expects net sales to grow in the range of 8% to 9%, up from the previous expectation of 6% to 8%. The company expects unfavorable currency movement to hurt growth by approximately 2% to 3%.
However, an unfavorable currency movement, ongoing supply chain challenges and the inflationary environment have led Stryker to lower its adjusted net earnings per share guidance to the range of $9.30 to $9.50 per share from the previous band of $9.60 to $10.
Wrapping Up
Stryker exited second-quarter 2022 on a weak note, wherein both earnings and revenues missed the respective estimates. The company, however, witnessed strong performance across the segments in the United States. However, international sales declined due to unfavorable currency movement.
Per management, despite the COVID-led disruptions, the company managed to deliver robust growth in both 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 QuidelOrtho (QDEL - Free Report) , Lucira Health and Myomo (MYO - Free Report) .
QuidelOrtho shares have gained 9.3% so far this year. QDEL’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 138.33%.
Lucira Health, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 600.00%.
So far this year, Lucira Health’s shares have declined 65.4%. LHDX’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 172.73%.
Myomo reported second-quarter 2022 adjusted loss per share of 41 cents, which surpassed the Zacks Consensus Estimate by 24.07%. It currently carries a Zacks Rank #2.
Myomo’s shares have decreased 75.2% year to date. MYO’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 16.79%.
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Stryker's (SYK) Q2 Earnings and Revenues Miss Estimates
Stryker Corporation (SYK - Free Report) reported second-quarter 2022 adjusted earnings per share (EPS) of $2.25, which missed the Zacks Consensus Estimate of $2.27 by 0.9%. The bottom line was flat year over year.
GAAP EPS in the quarter was $1.72, up 11% from the prior-year quarter.
Revenue Details
This Michigan-based medical device company reported revenues of $4.49 billion, which missed the Zacks Consensus Estimate of $4.53 billion by 0.9%. The top line, however, improved 4.6% on a year-over-year basis and 7.6% at constant currency (cc).
Revenues by Geography
Revenues in the United States were $3.31 billion, up 6.8% year over year. However, International sales were down 1% to $1.18 billion.
Segmental Analysis
Effective from Dec 31, 2021, Stryker updated its reportable business segments to align with its new internal reporting structure.
MedSurg and Neurotechnology: This segment reported sales of $2.55 billion, which improved 8% on a year-over-year basis. Sales at the segment rose 10.6% at cc. Improvement in volumes of products contributed to the upside, partially offset by lower prices. Per management, the segment saw 7.9% organic growth in the reported quarter.
Orthopaedics and Spine: Sales in the segment amounted to $1.94 billion, up 0.5% year over year and 3.9% at cc. The upside can be attributed to strength in the Hips and Knees sub-segments, partially offset by lower sales in Spine sub-segments and other products.
Stryker Corporation Price, Consensus and EPS Surprise
Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation Quote
Margins
In the second quarter, adjusted gross profit totaled $2.84 billion, up 0.4% from the year-ago quarter. The adjusted gross margin was 63.3%, down 270 basis points (bps).
Total operating expenses were $2.05 billion, up 0.7% from the year-ago quarter.
Adjusted operating income amounted to $1.06 billion, down 4.3% from the prior-year quarter. The adjusted operating margin was 23.7%, down 220 bps.
Financial Update
The company exited the second quarter with cash and cash equivalents of $1.04 billion, compared with $1.46 billion in the preceding quarter.
Cumulative net cash provided by operating activities in the second quarter was $732 million, compared with $1.33 billion in the year-ago period.
2022 Outlook
Stryker raised its outlook for revenue growth in 2022, considering its strong order book for capital equipment and the sales momentum in the implant businesses. The company expects net sales to grow in the range of 8% to 9%, up from the previous expectation of 6% to 8%. The company expects unfavorable currency movement to hurt growth by approximately 2% to 3%.
However, an unfavorable currency movement, ongoing supply chain challenges and the inflationary environment have led Stryker to lower its adjusted net earnings per share guidance to the range of $9.30 to $9.50 per share from the previous band of $9.60 to $10.
Wrapping Up
Stryker exited second-quarter 2022 on a weak note, wherein both earnings and revenues missed the respective estimates. The company, however, witnessed strong performance across the segments in the United States. However, international sales declined due to unfavorable currency movement.
Per management, despite the COVID-led disruptions, the company managed to deliver robust growth in both 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 QuidelOrtho (QDEL - Free Report) , Lucira Health and Myomo (MYO - Free Report) .
QuidelOrtho, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $11.66, which beat the Zacks Consensus Estimate by 25.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
QuidelOrtho shares have gained 9.3% so far this year. QDEL’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 138.33%.
Lucira Health, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 600.00%.
So far this year, Lucira Health’s shares have declined 65.4%. LHDX’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 172.73%.
Myomo reported second-quarter 2022 adjusted loss per share of 41 cents, which surpassed the Zacks Consensus Estimate by 24.07%. It currently carries a Zacks Rank #2.
Myomo’s shares have decreased 75.2% year to date. MYO’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 16.79%.