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Portage, Michigan-based Stryker Corporation (SYK) is a medical technology company that offers innovative products and services in MedSurg, Neurotechnology, and Orthopaedics that help improve patient and healthcare outcomes. Valued at a market cap of $147 billion, the company’s products are marketed directly to doctors, hospitals, and other healthcare facilities.
This healthcare giant’s shares have lagged behind the broader market over the past 52 weeks. Stryker has gained 10.2% over this time frame, while the broader S&P 500 Index ($SPX) has soared 22.3%. Nonetheless, the stock is up 7% on a YTD basis, outpacing SPX’s 4% rise during the same time frame.
Zooming in further, SYK has outpaced the Health Care Select Sector SPDR Fund’s (XLV) marginal return over the past 52 weeks and a 5.3% gain on a YTD basis.
On Jan. 28, SYK released its Q4 earnings results. The company delivered above-par Q4 adjusted earnings of $4.01 per share and revenues of $6.4 billion. Moreover, the bottom line improved 15.9% year-over-year while the top line advanced 10.7% from the year-ago quarter.
Despite the solid results, Stryker’s shares fell more than 1% the following day, primarily due to the company’s announcement of a definitive agreement to sell its U.S. spinal implants business to Viscogliosi Brothers, LLC, an investment firm specializing in the neuro-musculoskeletal sector. However, this sale is expected to help SYK focus on high-growth, innovative areas within its medical technology portfolio, improving operational efficiency and profitability.
For the current fiscal year, ending in December, analysts expect Stryker’s EPS to grow 10.7% year over year to $13.49. The company’s earnings surprise history is promising. It beat the Wall Street estimates in each of the last four quarters.
Among the 28 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 19 “Strong Buy,” two “Moderate Buy,” and seven “Hold” ratings.
This configuration is slightly more bullish than three months ago, with 18 analysts suggesting a “Strong Buy” rating.
On Feb. 10, Barclays analyst Matt Miksic maintained an “Overweight” rating on SYK and raised its price target to $443, which indicates a 15% potential upside from the current levels.
The mean price target of $428.92 represents an 11.3% upside from Stryker’s current price levels, while the Street-high price target of $465 suggests an upside potential of 20.7%.
