Stryker Corporation (SYK - Free Report) , a leading player in the medical technology space, is set to report first-quarter 2017 results on Apr 25 after the bell.
Last quarter, the company posted earnings of $1.78 per share, which surpassed the Zacks Consensus Estimate by 2 cents. Notably, on average, Stryker beat the Zacks Consensus Estimate by almost 2.04% over the last four quarters. Let’s see how things are shaping up prior to this release.
Why a Likely Positive Surprise?
Our proven model shows that Stryker is likely to beat estimates because it has the right combination of the two key ingredients.
Zacks ESP: Stryker’s Earnings ESP stands at +1.40%. This is because the company’s Most Accurate estimate is $1.45 while the Zacks Consensus Estimate is pegged at $1.43. A favorable ESP serves as a meaningful indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Stryker currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Stryker’s favorable Zacks Rank and positive ESP makes us reasonably confident of a beat.
Factors at Play
For the first quarter of 2017, Stryker expects adjusted earnings in the range of $1.40–$1.45 per share. Notably, this indicates a rise of 12.9% to 16.9% on a year-over-year basis. We believe that the growing adoption of MAKO robots will drive sales in the orthopedic and reconstructive surgery market. Additionally, Stryker is well poised with the acquisitions of both Sage and Physio-Control in the recent past.
The tie up with Indo UK Institute of Health’s Medicity Program is an important development as well. Notably, this is a 20-year partnership that aims to offer primary joint replacements (orthopedic areas of hip, knee and trauma products) and healthcare services in India at low costs (read more: Stryker-IUIH Medicity Program to Deliver Services in India).
A glimpse at the price performance of the stock over the past three months reveals a solid return of almost 8.6%. This compares favorably with the Zacks classified Medical products sub-industry’s growth of around 6.7%. In fact, with a long-term expected earnings growth rate of 9.6%, the stock has solid potential for further appreciation.
Stocks that Warrant a Look
Here are three companies you may want to consider as our proven model shows that they have the right combination of elements to post an earnings beat this quarter:
Proteostasis Therapeutics (PTI - Free Report) has an Earnings ESP of +5.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.
BioCryst Pharmaceuticals, Inc. (BCRX - Free Report) has an Earnings ESP of +31.58% and a Zacks Rank #2.
Hill-Rom Holdings, Inc. (HRC - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #2.
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