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Stryker (SYK) to Pay for Rejuvenate and ABG II Modular-Neck

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Medical technology company, Stryker Corporation (SYK - Free Report) announced that it has reached an agreement to compensate patients for Rejuvenate and ABG II Modular-Neck surgeries done prior to Dec 19, 2016.

Over the last six months, the stock returned almost 2.02%, which compares favorably with the Zacks categorized Medical Products sub-industry’s loss of roughly 6.17%. However, the markets reacted positively to the news as Stryker’s shares rose 0.3% to close at $118.81 following the news.  

We are upbeat about the favorable estimate revision trend for the stock as thirteen estimates moved north in the last two months. Notably, the current year estimates for the stock improved by 2 cents to $5.78 per share over the same time frame. Additionally, a long-term expected earnings growth rate of 9.68% and an earnings yield of 4.86%, compared to the industry’s yield of only 1.20% should draw investors to the stock.


The agreement was reached with the court-appointed committees of attorneys representing Rejuvenate Modular-Neck and ABG II Modular-Neck plaintiffs in New Jersey Multicounty and Federal Multidistrict litigations. Per the agreement, the company will compensate eligible U.S. patients who underwent surgery to replace their Rejuvenate Modular-Neck hip stem and/or ABG II Modular-Neck hip stem, known as a revision surgery.

This follows an initial 2014 Settlement Program that covered patients who had a revision surgery prior to Nov 3, 2014. In that initial program, over 95% of eligible patients were enrolled. Under this new agreement, additional patients are now eligible to participate and may apply for compensation. The Settlement Agreement will help bring to a close significant Rejuvenate Modular-Neck and ABG II Modular-Neck litigation activity in the U.S.  

Headquartered in Kalamazoo, MI, Stryker is one of the world’s largest medical device companies operating in the global orthopedic market. Of the recent notable developments, the spine division of Stryker announced the launch of LITe BIO Delivery System, a hand-held device which delivers bone graft material to spinal surgery sites.  

Coming to the latest developments, Stryker’s recent focus on India is a prudent move in our view. Per a report by Cision, India is the heart of global joint replacement surgeries and has witnessed a boom in medical tourism, especially from European countries, Africa and Middle East, courtesy of affordable procedure costs for joint replacement surgeries.

Zacks Rank & Key Picks

Currently, Stryker has a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader medical sector include Addus HomeCare Corporation (ADUS - Free Report) , LHC Group, Inc. and HMS Holdings Corp. . Addus HomeCare and LHC Group sport a Zacks Rank #1 (Strong Buy) while HMS Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of 42.9%.

LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 2.8% in the last one month.

HMS Holdings has an expected earnings growth of almost 14.3%. The company posted a promising year-to-date return of 48.5%.
 

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