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Here's Why You Should Hold on to Stryker (SYK) Stock Now
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Stryker Corporation (SYK - Free Report) is well poised for growth backed by robustly performing robotic-arm assisted surgery platform – Mako, diversified product portfolio and solid international growth. However, pricing pressure remains a headwind.
Shares of Stryker have lost 15.5%, compared with the industry’s decline of 16.8% in a year’s time. Meanwhile, the S&P 500 Index has fallen 14.2% in the same timeframe.
Stryker, with a market capitalization of $62.09 billion, is one of the world’s largest medical device companies operating in the global orthopedic market. It anticipates earnings to improve 8.2% over the next five years. Moreover, it has a trailing four-quarter positive earnings surprise of 1.5%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
An unfavorable pricing environment poses a constant threat to Stryker’s core businesses. In fact, pricing in fourth-quarter 2019 had an impact of 0.6% on the top line. Consequently, pricing pressure continues to weigh on the company’s performance.
What’s Favoring the Stock?
Mako is Stryker’s robotic-arm assisted surgery platform. Notably, Mako Total Knee platform performed robustly in fourth-quarter 2019 on the back of significant year-over-year increase in new robot installations. In the fourth quarter, Stryker installed a total of 89 robots globally, which included 63 in the United States, compared with 54 in the year-ago quarter.
Moreover, the company continues to witness strong demand for Mako on the back of its unique features and healthy order book. For 2020, the company’s Mako order book remains solid and is in sync with its aim of continued share gains in both hips and knees.
Additionally, Stryker has a diversified product portfolio. Its wide range of products provides the company immunity against any significant sales shortfall during economic downturns. Its significant exposure in robotics, Artificial Intelligence for health care and Medical Mechatronics has provided the company with a competitive edge in the MedTech space. Stryker’s portfolio includes products like Hip, Knee and Mako robotic-arm assisted surgeries.
Apart from these, Stryker has been one of the earliest adopters of the 3D printing technology. The company’s FDA-approved Tritanium TL Curved Posterior Lumbar Cage is a 3D-printed interbody fusion cage intended for use as an aid in lumbar fixation.
Further, the company is focusing on international growth. A significant turnaround in the company’s European business on account of effective restructuring measures represents a potential upside.
In fourth-quarter 2019, the company’s international sales improved 6.2%, year over year to $1.09 billion. Organically, international sales grew 7.6%, driven by robust gains in emerging markets, Europe, Japan and Canada.
Estimates Trend
For 2020, the Zacks Consensus Estimate for revenues is pegged at $15.19 billion, indicating an improvement of 2% from the prior-year quarter. The same for earnings stands at $8.63, suggesting a rise of 4.5% from the year-ago reported figure.
McKesson has an estimated long-term earnings growth rate of 6.1%.
Merit Medical has an estimated long-term earnings growth rate of 12.1%.
Cooper Companies has a projected long-term earnings growth rate of 10.8%.
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Here's Why You Should Hold on to Stryker (SYK) Stock Now
Stryker Corporation (SYK - Free Report) is well poised for growth backed by robustly performing robotic-arm assisted surgery platform – Mako, diversified product portfolio and solid international growth. However, pricing pressure remains a headwind.
Shares of Stryker have lost 15.5%, compared with the industry’s decline of 16.8% in a year’s time. Meanwhile, the S&P 500 Index has fallen 14.2% in the same timeframe.
Stryker, with a market capitalization of $62.09 billion, is one of the world’s largest medical device companies operating in the global orthopedic market. It anticipates earnings to improve 8.2% over the next five years. Moreover, it has a trailing four-quarter positive earnings surprise of 1.5%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
An unfavorable pricing environment poses a constant threat to Stryker’s core businesses. In fact, pricing in fourth-quarter 2019 had an impact of 0.6% on the top line. Consequently, pricing pressure continues to weigh on the company’s performance.
What’s Favoring the Stock?
Mako is Stryker’s robotic-arm assisted surgery platform. Notably, Mako Total Knee platform performed robustly in fourth-quarter 2019 on the back of significant year-over-year increase in new robot installations. In the fourth quarter, Stryker installed a total of 89 robots globally, which included 63 in the United States, compared with 54 in the year-ago quarter.
Moreover, the company continues to witness strong demand for Mako on the back of its unique features and healthy order book. For 2020, the company’s Mako order book remains solid and is in sync with its aim of continued share gains in both hips and knees.
Additionally, Stryker has a diversified product portfolio. Its wide range of products provides the company immunity against any significant sales shortfall during economic downturns. Its significant exposure in robotics, Artificial Intelligence for health care and Medical Mechatronics has provided the company with a competitive edge in the MedTech space. Stryker’s portfolio includes products like Hip, Knee and Mako robotic-arm assisted surgeries.
Apart from these, Stryker has been one of the earliest adopters of the 3D printing technology. The company’s FDA-approved Tritanium TL Curved Posterior Lumbar Cage is a 3D-printed interbody fusion cage intended for use as an aid in lumbar fixation.
Further, the company is focusing on international growth. A significant turnaround in the company’s European business on account of effective restructuring measures represents a potential upside.
In fourth-quarter 2019, the company’s international sales improved 6.2%, year over year to $1.09 billion. Organically, international sales grew 7.6%, driven by robust gains in emerging markets, Europe, Japan and Canada.
Estimates Trend
For 2020, the Zacks Consensus Estimate for revenues is pegged at $15.19 billion, indicating an improvement of 2% from the prior-year quarter. The same for earnings stands at $8.63, suggesting a rise of 4.5% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space include McKesson Corporation (MCK - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and The Cooper Companies, Inc. (COO - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has an estimated long-term earnings growth rate of 6.1%.
Merit Medical has an estimated long-term earnings growth rate of 12.1%.
Cooper Companies has a projected long-term earnings growth rate of 10.8%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>