Wells Fargo Securities Reiterates Outperform Rating on Stryker Corporation Following Announcement of MAKO Acquisition

Loading...
Loading...
In a report published Wednesday, Wells Fargo Securities analyst Larry Biegelsen reiterated an Outperform rating on
Stryker CorporationSYK
. In the report, Wells Fargo Securities noted, “This morning (9/25), SYK announced that it's acquiring MAKO for $1.65B which represents a 86% premium to the closing price yesterday. SYK expects the deal to be $0.10­$0.12 dilutive in the first full year, neutral in year two, and accretive thereafter. SYK indicated that it expects the deal to be accretive on a cash basis in the first full year. Regarding valuation, SYK is paying 12.4x EV/sales on our 2013 sales estimate which is relatively high but MAKO represents a differentiated asset in our view. The 2 most recent ortho deals, MDT's acquisition of Kanghui and SYK's acquisition of Trauson went for 11.6x and 8.7x, on an EV/sales basis respectively. Given CEO Kevin Lobo's interest in robotics we do not view this deal as a total surprise. We have been bullish on MAKO due to the positive feedback on the company's new total hip application as well as the potential upside from international expansion and the total knee opportunity.” Stryker Corporation closed on Tuesday at $70.83.
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorReiterationAnalyst RatingsLarry BiegelsenWells Fargo Securities
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...