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What's in Store for Stryker (SYK) this Earnings Season?
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Headquartered in Kalamazoo, MI, Stryker Corporation (SYK - Free Report) is set to report third-quarter 2016 results on Oct 27.
Last quarter, the company posted earnings of $1.39 per share, which surpassed the Zacks Consensus Estimate by 3 cents. Notably, on an average, Stryker beat the Zacks Consensus Estimate by almost 1.96% over the last four quarters.
Meanwhile, Stryker represents an impressive one-year return of almost 22.2%, ahead of the S&P’s 3.9% over the same time frame.
Let’s see how things are shaping up for this quarter.
We believe Stryker’s innovative product pipeline will prove to be a key catalyst in the near term. Growing adoption of MAKO products will drive sales in the orthopedic and reconstructive surgery market. Additionally, management expects to witness next generation products in each of three main categories – defibrillators and monitors, AEDs or automated external defibrillators, and circulatory assist devices over the long haul, which would fortify the company’s footprint in the markets.
The recent acquisitions of Sage and Physio Control also buoy optimism. With Sage, the company has the opportunity to expand in markets like Canada, Europe, Japan and Australia. In fact, per management, the ‘positive chemistry’ between Stryker and Sage will likely pave way for double-digit revenue growth in the second half of fiscal 2016.
On the flip side, product supply issues are expected to mar top-line growth in the Spine business. Additionally, pricing pressure will continue to hurt sales. Notably, China is expected to remain a challenging market for the company for the rest of 2016.
Earnings Whispers
Our proven model does not conclusively show that Stryker is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The earnings ESP for Stryker is +0.73%. This is because the Most Accurate estimate is $1.38 while the Zacks Consensus Estimate is pegged at $1.37. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Stryker carries a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Ariad Pharmaceuticals Inc. , with an earnings ESP of +5.26% and a Zacks Rank #1. Additionally, the stock represents a stellar one-year return of 38.2%.
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200.00% and a Zacks Rank #1. We note that the company represents an impressive one-year return of almost 66.2%.
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What's in Store for Stryker (SYK) this Earnings Season?
Headquartered in Kalamazoo, MI, Stryker Corporation (SYK - Free Report) is set to report third-quarter 2016 results on Oct 27.
Last quarter, the company posted earnings of $1.39 per share, which surpassed the Zacks Consensus Estimate by 3 cents. Notably, on an average, Stryker beat the Zacks Consensus Estimate by almost 1.96% over the last four quarters.
Meanwhile, Stryker represents an impressive one-year return of almost 22.2%, ahead of the S&P’s 3.9% over the same time frame.
Let’s see how things are shaping up for this quarter.
STRYKER CORP Price and EPS Surprise
STRYKER CORP Price and EPS Surprise | STRYKER CORP Quote
Factors at Play
We believe Stryker’s innovative product pipeline will prove to be a key catalyst in the near term. Growing adoption of MAKO products will drive sales in the orthopedic and reconstructive surgery market. Additionally, management expects to witness next generation products in each of three main categories – defibrillators and monitors, AEDs or automated external defibrillators, and circulatory assist devices over the long haul, which would fortify the company’s footprint in the markets.
The recent acquisitions of Sage and Physio Control also buoy optimism. With Sage, the company has the opportunity to expand in markets like Canada, Europe, Japan and Australia. In fact, per management, the ‘positive chemistry’ between Stryker and Sage will likely pave way for double-digit revenue growth in the second half of fiscal 2016.
On the flip side, product supply issues are expected to mar top-line growth in the Spine business. Additionally, pricing pressure will continue to hurt sales. Notably, China is expected to remain a challenging market for the company for the rest of 2016.
Earnings Whispers
Our proven model does not conclusively show that Stryker is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The earnings ESP for Stryker is +0.73%. This is because the Most Accurate estimate is $1.38 while the Zacks Consensus Estimate is pegged at $1.37. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Stryker carries a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Ariad Pharmaceuticals Inc. , with an earnings ESP of +5.26% and a Zacks Rank #1. Additionally, the stock represents a stellar one-year return of 38.2%.
Exelixis Inc. (EXEL - Free Report) , with an earnings ESP of +7.69% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. Notably, the company has a stupendous one-year return of 94.3%.
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200.00% and a Zacks Rank #1. We note that the company represents an impressive one-year return of almost 66.2%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>