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Stryker's HyperBranch Buyout to Boost Neurotechnology Business

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Stryker Corporation (SYK - Free Report) recently announced the acquisition of HyperBranch Medical Technology for a deal value of $220 million in cash. The buyout is likely to boost Stryker’s core Neurotechnology business. Management expects the acquisition to remain neutral to Stryker’s 2018 earnings.

Rationale Behind the Deal

North Carolina-based HyperBranch Medical Technology is privately-held company, specialized in developing medical devices based on its proprietary polymers and cross-linked hydrogels. Notably, the company’s Adherus AutoSpray Dural Sealant product is one of the only two FDA-approved dural sealants in the market.

Per Stryker’s management, HyperBranch’s Adherus product is complementary to its Craniomaxillofacial division. Notably, Srtyker’s maxillofacial surgical solutions include products like Advanced Midface Distractor, Cranial iD and the DuraMatrix portfolio. All these products enjoy high demand and have been significantly contributing to the company’s growth.

Thus, the latest move fortifies the Michigan-based MedTech giant’s position in the craniomaxillofacial devices market.

Neurotechnology at a Glance

Stryker’s Neurotechnology business has consistently driven the company’s top line. The company continues to witness robust demand for its Neurotechnology products.

Notably, the segment offers spine, cranial and neurovascular surgical solutions.

Last month, Stryker announced an agreement to acquire Invuity Inc. which is expected to aid the company’s Neurotechnology & Spine segment. (Read More: Stryker to Acquire Invuity, Boost Surgical Portfolio)

In fact, in the last reported quarter, Neurotechnology business grew 23.1% year over year and 15.4% organically.

Market Prospects

Grand View Research validates that the global craniomaxillofacial devices market was valued at $1.28 billion in 2016 and is expected to see a CAGR of 8.6% by 2025.

Rising incidences of road accidents due to urbanization and industrialization along with growing demand for reconstructive surgeries currently drive the market.

Price Performance

We believe positive developments such as these will provide cushion to the stock, which has rallied 23.5% compared with the industry’s 25.1% rise in a year’s time. However, the current level is higher than the S&P 500 index’s 16% increase.

The stock currently has a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks in the broader medical space are Baxter International (BAX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Inogen, Inc. (INGN - Free Report) .

Baxter’s long-term earnings growth rate is projected at 12.4%. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical has an expected long-term earnings growth of 14.7%. The stock has a Zacks Rank #2.

Inogen’s long-term earnings growth rate is projected at 24.5%. The stock has a Zacks Rank #2.

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