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SYK vs. SRDX: Which MedTech Stock Should Investors Pick?

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Medical Product companies Stryker Corporation (SYK - Free Report) and Surmodics, Inc. (SRDX - Free Report) are solid contenders in the U.S. MedTech space. Rapid innovation, major advances and aging population in the United States have sustained the popularity of healthcare stocks. Despite U.S.-China trade war-related uncertainties, 2019 is expected to witness new technologies, courtesy of the 2.3% Medical Device tax abatement along with focus on Artificial Intelligence and cybersecurity.

Considering this backdrop, it is difficult to choose between the above-mentioned companies as they have similar business models. The scales apparently look balanced as Stryker and Surmodics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, we made a detailed analysis of the companies’ fundamentals to determine which has a slight edge over the other.
Michigan-based Stryker is an orthopedic device giant and Minnesota-based Surmodics is a leading provider of medical device and In Vitro Diagnostics (IVD) technologies to the healthcare industry.

Price Performance & Style Score

In the past year, Stryker’s shares have declined 3.1% compared with Surmodics’ 67.4% surge. The Medical Products industry has declined 12.1% in the same time frame. Meanwhile, the S&P 500 index fell 12.4%.

Reflective of these favorable price movements, Stryker has a Momentum Score of A and the same for Surmodics is B. This reflects possibilities of outperformance at the moment. Our research shows that stocks with a Momentum Score of A or B, combined with a Zacks Rank #1 or 2, are better picks than most.

Which Way are Estimates Treading?

Earnings

The Zacks Consensus Estimate for Stryker’s fourth-quarter earnings per share (EPS) is pegged at $2.16, reflecting an improvement of 10.2% year over year. Surmodics’ fiscal first-quarter loss per share is pegged at a penny, showing year-over-year decline of 110%.

Stryker Corporation Price and Consensus

 

Stryker Corporation Price and Consensus | Stryker Corporation Quote

Sales

The Zacks Consensus Estimate for Stryker’s current-quarter revenues is pegged at $3.73 billion, suggesting growth of 7.5% from the previous year. The same for Surmodics is pegged at $18.90 million, reflecting a rise of 11.1% year over year.

Surmodics, Inc. Price and Consensus

 

Surmodics, Inc. Price and Consensus | Surmodics, Inc. Quote

What’s Favoring the Stocks?

In the past four years, Stryker’s revenues have witnessed a CAGR of 8.8% and reached $12 billion.

Notably, Stryker’s 2018 adjusted earnings per share are projected in the range of $7.25-$7.30. The Zacks Consensus Estimate for earnings is pegged at 7.28 per share, within the guided range.

Meanwhile, Surmodics’ revenues have witnessed a CAGR of 9.3% and reached $81 million in the past four years.

Surmodics expects a loss of 7 cents per share to earnings of 23 cents per share for fiscal 2019. The Zacks Consensus Estimate for earnings is pegged 8 cents, within the guided range.

Key Picks

A few other top-ranked stocks in the broader medical space are Veeva Systems Inc (VEEV - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .

Veeva Systems’ long-term earnings growth rate is projected at 19.5%. The stock flaunts a Zacks Rank #1.

Integer Holdings projects earnings growth rate of 31.2% for the fourth quarter. It currently carries a Zacks Rank #2.

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