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Reasons to Add Stryker (SYK) Stock to Your Portfolio 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 concern.
Shares of this Zacks Rank #2 (Buy) company have risen 8.7% year to date against the industry’s 8.3% decline. The S&P 500 Index has increased 13% in the same time frame.
Stryker, with a market capitalization of $104 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve 10% in the next five years. SYK’s earnings yield of 3.8% compares favorably with the industry’s (2.2%).
Image Source: Zacks Investment Research
What’s Favoring Stryker’s Growth?
Stryker continues to witness strong demand for Mako and a healthy order book amid recovery in procedure-demand following the COVID-19 pandemic. This is due to the platform’s unique and promising features. These developments, in turn, enable the company to sustain the momentum in robotic-treatment sales.
SYK is committed to the continued expansion of Mako, with launches in new countries. It remains confident about robust growth in Mako revenues in the second half of 2023, on the back of continued adoption, new launches and software upgrades.
The second-quarter results reflected Stryker’s efforts to promote the advanced surgery platform.
SYK also boasts a diversified product portfolio. Its wide range of products protects it against any significant sales shortfall during economic turmoil.
The company’s significant exposure to robotics and artificial intelligence for healthcare and Medical Mechatronics have helped it stay ahead of the curve in the MedTech space. The company’s portfolio includes Mako as well as products for hip and knee surgeries.
On its second-quarter earnings call, Stryker stated that procedural volumes continue to recover in most countries after getting adversely affected last year due to COVID-19. Although hospital staffing pressure remains in certain regions, the company expects this problem to resolve gradually. This improvement, in turn, will likely lead to higher procedures in the rest of 2023.
Per management, Stryker’s constant support for customers and focus on innovation poise it for growth as the effect of the pandemic subsides. In second-quarter 2023, the company’s adjusted research and development expenses were 6.4% of net sales, highlighting its strong commitment to innovation. According to management, this is likely to drive new product launches.
In September 2022, SYK launched a new Spine Guidance Software — Q Guidance System — for spine application. The Q Guidance system has shown promising launch uptake during the first half of 2023. In July, the company commercially launched its Q Guidance system with Cranial Guidance software in the United States.
Stryker also launched a fully autonomous guidance system, Ortho Q Guidance, designed specifically for its orthopedic customers the same month. These two developments should bring additional revenues in the rest of 2023.
In September, Stryker unveiled the next generation of minimally-invasive surgical cameras, the 1788 platform. The fully-enhanced camera is expected to advance surgery outcomes across multiple specialties. The platform is compatible with the currently-marketed imaging agents and adaptable to new agents and fluorescence modes as they become available.
The same month, the FDA granted 510k clearance to its Pangea systems, including Femur, Fibula, Tibia, Humerus and Utility. A potential launch of these two systems is likely to drive top line going forward.
Moreover, Stryker’s cost-cutting initiatives to improve margins and lessen inflationary pressure look promising. The adjusted selling, general and administrative expenses during second-quarter 2023 were 33.1% of net sales, expanding 70 basis points year over year.
What’s Hurting the Stock?
An unfavorable currency rate fluctuation poses a persistent threat to SYK’s core businesses. Foreign currency had a 1.4% unfavorable impact on sales during the first half of 2023. The trend is likely to continue in the second half of 2023. The company is also facing inflationary pressure, leading to lower margins.
Estimate Trend
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $10.37, indicating year-over-year growth of 11%. The same for revenues is pinned at $20.26 billion, implying a 9.8% improvement year over year.
Some other top-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , McKesson Corporation (MCK - Free Report) and Medpace (MEDP - Free Report) .
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 42.1% year to date compared with the industry’s 9.3% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 16.6% year to date compared with the industry’s 9.3% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 14.2% year to date against the industry’s 13% decline.
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Reasons to Add Stryker (SYK) Stock to Your Portfolio 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 concern.
Shares of this Zacks Rank #2 (Buy) company have risen 8.7% year to date against the industry’s 8.3% decline. The S&P 500 Index has increased 13% in the same time frame.
Stryker, with a market capitalization of $104 billion, is one of the world’s largest medical device companies operating in the orthopedic market. It anticipates earnings to improve 10% in the next five years. SYK’s earnings yield of 3.8% compares favorably with the industry’s (2.2%).
Image Source: Zacks Investment Research
What’s Favoring Stryker’s Growth?
Stryker continues to witness strong demand for Mako and a healthy order book amid recovery in procedure-demand following the COVID-19 pandemic. This is due to the platform’s unique and promising features. These developments, in turn, enable the company to sustain the momentum in robotic-treatment sales.
SYK is committed to the continued expansion of Mako, with launches in new countries. It remains confident about robust growth in Mako revenues in the second half of 2023, on the back of continued adoption, new launches and software upgrades.
The second-quarter results reflected Stryker’s efforts to promote the advanced surgery platform.
SYK also boasts a diversified product portfolio. Its wide range of products protects it against any significant sales shortfall during economic turmoil.
The company’s significant exposure to robotics and artificial intelligence for healthcare and Medical Mechatronics have helped it stay ahead of the curve in the MedTech space. The company’s portfolio includes Mako as well as products for hip and knee surgeries.
On its second-quarter earnings call, Stryker stated that procedural volumes continue to recover in most countries after getting adversely affected last year due to COVID-19. Although hospital staffing pressure remains in certain regions, the company expects this problem to resolve gradually. This improvement, in turn, will likely lead to higher procedures in the rest of 2023.
Per management, Stryker’s constant support for customers and focus on innovation poise it for growth as the effect of the pandemic subsides. In second-quarter 2023, the company’s adjusted research and development expenses were 6.4% of net sales, highlighting its strong commitment to innovation. According to management, this is likely to drive new product launches.
In September 2022, SYK launched a new Spine Guidance Software — Q Guidance System — for spine application. The Q Guidance system has shown promising launch uptake during the first half of 2023. In July, the company commercially launched its Q Guidance system with Cranial Guidance software in the United States.
Stryker also launched a fully autonomous guidance system, Ortho Q Guidance, designed specifically for its orthopedic customers the same month. These two developments should bring additional revenues in the rest of 2023.
In September, Stryker unveiled the next generation of minimally-invasive surgical cameras, the 1788 platform. The fully-enhanced camera is expected to advance surgery outcomes across multiple specialties. The platform is compatible with the currently-marketed imaging agents and adaptable to new agents and fluorescence modes as they become available.
The same month, the FDA granted 510k clearance to its Pangea systems, including Femur, Fibula, Tibia, Humerus and Utility. A potential launch of these two systems is likely to drive top line going forward.
Moreover, Stryker’s cost-cutting initiatives to improve margins and lessen inflationary pressure look promising. The adjusted selling, general and administrative expenses during second-quarter 2023 were 33.1% of net sales, expanding 70 basis points year over year.
What’s Hurting the Stock?
An unfavorable currency rate fluctuation poses a persistent threat to SYK’s core businesses. Foreign currency had a 1.4% unfavorable impact on sales during the first half of 2023. The trend is likely to continue in the second half of 2023. The company is also facing inflationary pressure, leading to lower margins.
Estimate Trend
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $10.37, indicating year-over-year growth of 11%. The same for revenues is pinned at $20.26 billion, implying a 9.8% improvement year over year.
Stryker Corporation Price
Stryker Corporation price | Stryker Corporation Quote
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space are Align Technology (ALGN - Free Report) , McKesson Corporation (MCK - Free Report) and Medpace (MEDP - Free Report) .
Align Technology, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALGN’s earnings surpassed estimates in two of the trailing four quarters and missed twice, delivering an average negative surprise of 1.76%. The company’s shares have risen 42.1% year to date compared with the industry’s 9.3% growth.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 16.6% year to date compared with the industry’s 9.3% growth.
Medpace, carrying a Zacks Rank #2 at present, has an estimated growth rate of 16.2% for 2024. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 22.28%.
The company’s shares have rallied 14.2% year to date against the industry’s 13% decline.