Stryker Corporation SYK is currently a top performer in the MedTech space. Improved price performance and strong fundamentals instill investors’ confidence in the stock. Therefore, its time you advantage from the stock price appreciation.
In the past year, Stryker’s shares have rallied 22.3%, significantly outperforming the industry’s growth of 14.6%.
In the last 60 days, the Zacks Consensus Estimate for earnings per share rose 1.8% to $1.73. The company has a Zacks Rank #2 (Buy), which indicates possibility of outperformance in the near term.
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Let’s find out whether the bullish trend can sustain the stock’s impressive performance in the long run.
What Makes It an Attractive Pick?
Focus on Inorganic Growth
Stryker has been leveraging on bolt-on buyouts to drive inorganic growth. Stryker recently acquired Entellus Medical, Inc. for $662 million. Stryker also acquired VEXIM in the recent past which specializes in the development and sale of vertebral compression fracture solutions for €183 million. In 2017, the company closed the buyout of NOVADAQ for a net purchase price of $674 million.
In the last reported quarter, all the buyouts have proven accretive to Stryker.
Mako Propels Growth
Mako is Stryker’s robotic-arm assisted surgery platform. The first quarter of 2018 saw another strong show by the Mako Total Knee platform. Per management, the primary growth drivers included continued demand for the Mako TKA knee platform and 3D-printed products in the foot and ankle portfolio. In the reported quarter, the company installed a total of 28 robots globally with 24 in the United States, reflecting an increase of 33.3% year over year.
Guidance Solid
Buoyed by a stellar first quarter, Stryker expects second-quarter earnings per share of $1.70-$1.75. Notably, the Zacks Consensus Estimate for earnings is pegged at $1.73, which is within the given range.
Moreover, organic net sales growth in 2018 is expected within 6.5-7% and adjusted net earnings per diluted share in the range of $7.18-$7.25.
Management is also confident of a 30-50 basis point improvement in operating margin.
Other Key Picks
Some other top-ranked medical stocks are Abiomed, Inc. ABMD, Varian Medical VAR and Intuitive Surgical Inc. ISRG.
Abiomed has an expected long-term earnings growth rate of 27%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an expected long-term earnings growth rate of 12.1%. The stock sports a Zacks Rank #1.
Varian Medical has a projected long-term earnings growth rate of 8%. The stock carries a Zacks Rank #2.
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