Stryker Momentum Continues despite Overall Slide - Analyst Blog

Shares of Stryker Corporation SYK continued its momentum based on recent spate of strong developments moving in favor of the company. It reached the all-time high of $84.85 in mid-trading on April 4 but dipped 1.7% to close at $81.23 yesterday, albeit maintaining the uptrend experienced in the last three months.

Stryker's momentum is noteworthy given the momentum slide experienced by several large players in the market such as Alexion Pharmaceuticals, Inc. ALXN and Facebook, Inc. FB. Both Alexion Pharmaceuticals and Facebook lost more than 20% in the last month.

Considering the last three months, shares of Stryker returned 5.5%, much higher than the S&P 500's return of 0.4%. Stryker looks even more favorable if we look at some of its peers such as Enzymotec Ltd. ENZY and St. Jude Medical Inc. STJ. Enzymotec lost a whopping 30.2% in the last 90 days while St. Jude Medical fell 2.9% in the same timeframe.

Catalysts for Growth

Stryker seems to enjoy a lot of confidence these days, given the recent acquisition spree. In Dec last year, Stryker completed its acquisition of MAKO Surgical for $1.65 billion. The acquisition of MAKO alloweed Stryker to get hold of the latter's advanced robotic arm technology known as Robotic Arm Interactive Orthopedic System, or RIO.

In Jan this year, Stryker also announced that it will buy Irvine, Calif.-based Patient Safety Technologies for $120 million in order to utilize Patient Safety's device to lessen the risk of surgical sponges being left in patients after surgery.

In Feb, Stryker announced agreements to acquire the U.S.-based developer of hip arthroscopy products, Pivot Medical, Inc and German surgical tools firm, Berchtold Holding. Among them, the company closed the Pivot Medical deal only last month.

Pivot's offerings are expected to complement Stryker's existing Sports Medicine portfolio and will provide Stryker's customers with more comprehensive solutions to address certain challenges faced during current Sports Medicine procedures.

The yet-to-be-closed Berchtold acquisition is expected to boost Stryker's fast growing endoscopy division and operating room equipment product portfolio by adding complementary solutions. The deal will allow Stryker to strengthen its portfolio and broaden its hospital product offerings.

Recently, Stryker also settled a federal lawsuit over the allegation that the company along with Alliant Enterprises has overcharged the U.S. Veterans Affairs Dept. for medical equipment. Both the companies agreed to make a collective payment of $1 million but didn't admit of any wrongdoing.

Stryker also beat both the bottom line and top line estimates in the 2013-foruth quarter. The company's adjusted earnings per share of $1.23 went up 7.9% year over year and exceeded the Zacks Consensus Estimate by a penny for the quarter. Revenues in the quarter grew 5.6% to $2,468 million, topping the Zacks Consensus Estimate of $2,444 million.

Stryker also expects adjusted earnings in the range of $4.75 to $4.90 per share for 2014, reflecting a 12.3–15.8% rise from 2013.

Currently, Stryker carries a Zacks Rank #3 (Hold).