RBC Capital Remains On Sidelines For This MedTech Stock

  • Stryker Corporation SYK reported 1Q FY22 results that beat on the top and bottom line, reflecting a solid rebound in procedure volumes in March. 
  • SYK expects FY22 organic revenue growth in its 6-8% range. SYK called out the supply chain and inflation issues and expected EPS to come near the low-end of its $9.60-10.00 range. 
  • RBC Capital Market remains on the sidelines at this time and maintains a Sector Perform rating.
  • SYK reported Q1 sales of $4.3 billion, +8.1% Y/Y (+9.2% organic), exceeding consensus estimates and RBC estimate of $4.2 billion. 
  • The beat was broad-based, with numbers coming in above expectations for all sub-segments except for other ortho and neurovascular.
  • While the company did report a bounce back in surgical procedures and declining COVID-19 cases, supply chain challenges and electronic component shortages constrained sales growth. 
  • The impact was felt the most in SYK’s MedSurg business and Medical sub-segment.
  • SYK is also seeing inflation in freight costs hitting margins. SYK expects that Q2 should look similar to Q1 in terms of supply challenges. 
  • While the company does not expect a full recovery in the global supply chain before 2023, it does expect to be able to procure enough to meet demand by year-end.
  • Price Action: SYK shares are down 3.45% at $243.39 during the market session on the last check Friday.

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