On July 10, we have updated our research report on
). We are confident about the stock given its continued momentum
and potential to become a major medtech company.
Stryker continues to grow through acquisitions. In Dec last year,
Stryker completed its acquisition of MAKO Surgical to get hold of
the latter's advanced robotic arm technology known as Robotic Arm
Interactive Orthopedic System (RIO). The acquisition helped Stryker
gain competitive edge in the hip-and-knee replacement market.
In March this year, Stryker completed acquisitions of Irvine,
CA-based Patient Safety Technologies and Sunnyvale, CA-based
developer of hip arthroscopy products, Pivot Medical, Inc.
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.
Thereafter, in April, Stryker closed the Berchtold acquisition,
which is expected to boost Stryker's fast growing endoscopy
division and operating room equipment product portfolio by adding
However, Stryker faces strong competition from
Johnson & Johnson
). It also faces obstacles for becoming a major medtech company
from a couple of recent M&A activities. They include the merger
), and between
Zimmer Holdings, Inc.
) and privately-owned Biomet, Inc.
Both of these M&A activities pose threat to Stryker's attempt
to become a major market power. However, Stryker can mitigate the
impact from these M&A activities by turning their previously
rumored bid to takeover London-based
Smith & Nephew plc
) into reality.
The acquisition of Smith & Nephew will further boost Stryker's
competitive position in the hip and knee replacement market after
the MAKO acquisition and open up avenues for growth in the
wound-care management business. In addition, the acquisition will
help Stryker take advantage of the potential growth in the emerging
For 2014, Stryker expects to report adjusted EPS in the range of
$4.75 to $4.90. The current Zacks Consensus Estimate of $4.80 lies
within the guided range.
As per Stryker, organic revenues growth is expected in the range of
4.5 to 6.0% for 2014. Unfavorable foreign exchange is expected to
impact the full year and second-quarter net sales by less than 1%.
Currently, Stryker carries a Zacks Rank #3 (Hold).
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