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Stryker (SYK) Down 6.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Stryker (SYK - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Stryker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Stryker reported fourth-quarter 2022 adjusted earnings per share (EPS) of $3.00, which beat the Zacks Consensus Estimate of $2.84 by 5.6%. The bottom line improved 10.7% year over year.
However, GAAP EPS in the quarter of $1.47 was down 15% from the prior-year quarter.
Revenue Details
This Michigan-based medical device company reported revenues of $5.2 billion, which beat the Zacks Consensus Estimate of $4.95 billion by 5.1%. The top line improved 10.7% on a year-over-year basis and 14.5% at constant currency (cc). Sales were up 13.2% organically, indicating 13.8% growth in unit volume, which was offset by 0.6% due to lower prices.
Revenues by Geography
Revenues in the United States were $3.86 billion, up 13% year over year. International sales were up 4.4% to $1.34 billion. Excluding the negative impact of currency, International sales were up 18.3%. Strong growth in Europe, Canada, Australia and emerging markets drove the International sales during the quarter. However, hospital staffing pressures have weighed onpockets around the globe, impeding growth.
Segmental Analysis
On Dec 31, 2021, Stryker updated its reportable business segments to align with its new internal reporting structure.
MedSurg and Neurotechnology: This segment reported sales of $3.05 billion, up 15.6% year over year and 19.3% at cc. Double-digit growth in the Surgical Technology business, emergency care, Prime Structure businesses and the U.S. Neurocranial business primarily drove segmental sales. Strong performances in Europe, Australia and emerging markets also boosted sales during the quarter. Per management, the segment saw 19.3% organic growth in the reported quarter.
Orthopedics and Spine: Sales in the segment amounted to $2.15 billion, up 4.3% year over year and 8.3% at cc. The upside can be attributed to continued procedural growth, the recent launch of the Insignia Hip Stem and Mako software upgrade.
Margins
In the fourth quarter, adjusted gross profit totaled $3.26 billion, up 5.6% from the year-ago quarter. However, the adjusted gross margin was 62.7%, down 310 basis points (bps).
Total operating expenses were $2.42 billion, up 8.8% from the year-ago quarter, primarily due to a goodwill impairment charge of $216 million related to Stryker’s Spine business.
Adjusted operating income amounted to $1.39 billion, up 7.9% from the prior-year quarter. However, the adjusted operating margin was 26.6%, down 70 bps.
Full Year Results
Stryker recorded total revenues of $18.45 billion in 2022, up 7.8% year over year. Adjusted EPS for the full-year was $9.34, up 2.8% from the prior-year.
Financial Update
The company exited the fourth quarter with cash and cash equivalents of $1.84 billion, compared with $1.42 billion in the preceding quarter.
Cumulative net cash provided by operating activities in the fourth quarter was $2.62 billion, compared with $3.26 billion in the year-ago period.
2023 Guidance Issued
Stryker announced its guidance for total revenues and adjusted EPS for 2023. The company expects organic growth for total revenues to be 7-8.5% compared with 2022. It expects the good momentum to continue into 2023. However, macro-economic volatility is likely to persist due to alleviating supply chain disruptions, inflationary risks and currency fluctuations. The Zacks Consensus Estimate for total revenues stands at $19.25 billion.
Stryker expects its adjusted EPS to be $9.85-$10.15 for 2023, implying a growth of 7.1% at the midpoint of the range. The Zacks Consensus Estimate is pegged at $9.85 for the same. The company expects unfavorable currency movement to hurt growth modestly in 2023, if foreign currency exchange rates hold near current levels. It expects the price impact to be between 0% and -0.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Stryker has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stryker has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Stryker (SYK) Down 6.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Stryker (SYK - Free Report) . Shares have lost about 6.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Stryker due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Stryker’s Q4 Earnings Beat Estimates, Volume Improves
Stryker reported fourth-quarter 2022 adjusted earnings per share (EPS) of $3.00, which beat the Zacks Consensus Estimate of $2.84 by 5.6%. The bottom line improved 10.7% year over year.
However, GAAP EPS in the quarter of $1.47 was down 15% from the prior-year quarter.
Revenue Details
This Michigan-based medical device company reported revenues of $5.2 billion, which beat the Zacks Consensus Estimate of $4.95 billion by 5.1%. The top line improved 10.7% on a year-over-year basis and 14.5% at constant currency (cc). Sales were up 13.2% organically, indicating 13.8% growth in unit volume, which was offset by 0.6% due to lower prices.
Revenues by Geography
Revenues in the United States were $3.86 billion, up 13% year over year. International sales were up 4.4% to $1.34 billion. Excluding the negative impact of currency, International sales were up 18.3%. Strong growth in Europe, Canada, Australia and emerging markets drove the International sales during the quarter. However, hospital staffing pressures have weighed onpockets around the globe, impeding growth.
Segmental Analysis
On Dec 31, 2021, Stryker updated its reportable business segments to align with its new internal reporting structure.
MedSurg and Neurotechnology: This segment reported sales of $3.05 billion, up 15.6% year over year and 19.3% at cc. Double-digit growth in the Surgical Technology business, emergency care, Prime Structure businesses and the U.S. Neurocranial business primarily drove segmental sales. Strong performances in Europe, Australia and emerging markets also boosted sales during the quarter. Per management, the segment saw 19.3% organic growth in the reported quarter.
Orthopedics and Spine: Sales in the segment amounted to $2.15 billion, up 4.3% year over year and 8.3% at cc. The upside can be attributed to continued procedural growth, the recent launch of the Insignia Hip Stem and Mako software upgrade.
Margins
In the fourth quarter, adjusted gross profit totaled $3.26 billion, up 5.6% from the year-ago quarter. However, the adjusted gross margin was 62.7%, down 310 basis points (bps).
Total operating expenses were $2.42 billion, up 8.8% from the year-ago quarter, primarily due to a goodwill impairment charge of $216 million related to Stryker’s Spine business.
Adjusted operating income amounted to $1.39 billion, up 7.9% from the prior-year quarter. However, the adjusted operating margin was 26.6%, down 70 bps.
Full Year Results
Stryker recorded total revenues of $18.45 billion in 2022, up 7.8% year over year. Adjusted EPS for the full-year was $9.34, up 2.8% from the prior-year.
Financial Update
The company exited the fourth quarter with cash and cash equivalents of $1.84 billion, compared with $1.42 billion in the preceding quarter.
Cumulative net cash provided by operating activities in the fourth quarter was $2.62 billion, compared with $3.26 billion in the year-ago period.
2023 Guidance Issued
Stryker announced its guidance for total revenues and adjusted EPS for 2023. The company expects organic growth for total revenues to be 7-8.5% compared with 2022. It expects the good momentum to continue into 2023. However, macro-economic volatility is likely to persist due to alleviating supply chain disruptions, inflationary risks and currency fluctuations. The Zacks Consensus Estimate for total revenues stands at $19.25 billion.
Stryker expects its adjusted EPS to be $9.85-$10.15 for 2023, implying a growth of 7.1% at the midpoint of the range. The Zacks Consensus Estimate is pegged at $9.85 for the same. The company expects unfavorable currency movement to hurt growth modestly in 2023, if foreign currency exchange rates hold near current levels. It expects the price impact to be between 0% and -0.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Stryker has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Stryker has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.