Stryker Raised to Strong Buy - Analyst Blog

On Mar 20, Zacks Investment Research upgraded Stryker Corporation SYK to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Stryker has been witnessing rising earnings estimates on the back of strong fourth-quarter 2013 results. Moreover, this MI-based medical technology company is well positioned in the worldwide Reconstructive market for the long-run via the integration of its MAKO technology. The long-term expected earnings growth rate for this stock is 8.28%.   

Stryker reported its fourth-quarter results on Jan 22, 2014. Adjusted earnings per share came in at $1.23, edging past the Zacks Consensus Estimate of $1.22 by 0.82% and exceeding the company's prior-year earnings by 7.9%.

Earnings were primarily aided by healthy top-line growth of 5.6% in the reported quarter, which was largely driven by a 10.1% increase in revenues from the Trauma and Extremities business.

Also, a dividend increment of 15% as declared by the board of directors of Stryker last month reflects the company's strong financial position and earnings strength.   

Based on its progress, the company expects its adjusted earnings per share in 2014 in the range of $4.75–$4.90. Management also expects organic sales growth for the full year in the range of 4.5% to 6%.

The Zacks Consensus Estimate for earnings for 2014 increased 5.5% to $4.83 per share as all of the 20 estimates were revised higher over the last 60 days, with no downward revisions. The current Zacks Consensus Estimate lies within the guidance range provided by Stryker. For 2015, 12 estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 5.2% to $5.27 per share.

Other Stocks to Consider

In the Medical Products space, Enzymotec Ltd. ENZY, Covidien plc COV and SurModics, Inc. SRDX are performing well. While Enzymotec holds the same Zacks Rank as Stryker, Covidien and SurModics hold a Zacks Rank #2 (Buy).