Stryker continues to grow through acquisitions. Though its
2014-second quarter adjusted earnings rose nearly 1.0%
year-over-year, it missed the Zacks Consensus Estimate by $0.01.
The company expects a 5.0 to 6.0% growth in organic revenues for
2014 as compared with the earlier range of 4.5 to 6%. However, we
are concerned about the strong competition from Johnson &
Johnson. Further, the merger announcements between Medtronic and
Covidien, and between Zimmer Holdings and Biomet pose threat to
Stryker from becoming a major medtech company. As a result, we
reiterate our Neutral recommendation on Stryker and set a target
price of $88.00.
Headquartered in Kalamazoo, MI., Stryker Corporation (SYK) is
one of the world's largest medical device companies operating in
the global orthopedic market. The company was founded in 1941 and
sells its offerings in more than 100 countries worldwide. As such,
Stryker currently has three business segments: Reconstructive,
MedSurg Equipment, and Neurotechnology and Spine.
The Reconstructive division (43.4% of total revenues in the
first six months of 2014) includes hip, knee, trauma-related
products and extremities implant systems. As part of the hip
offerings, the company offers a number of products designed to meet
the needs of revision hip procedures, including Restoration,
Restoration Modular, Trident Acetabular and ADM Mobile Bearing,
each of which provides surgeons with the options necessary to
address revision surgery challenges. Stryker's knee implant systems
include Triathlon, Scorpio, and Global Modular Replacement System
(GMRS) systems. The company has several product lines for trauma
and extremity implant including Intramedullary (IM) and
cephalomedullary nails, locked and non-locked plating, hip fracture
solutions, external fixation systems and bone substitutes.
The MedSurg Equipment segment (38.4%) comprises three main
divisions: Stryker Instruments (powered surgical tools), Stryker
Endoscopy (powered surgical instruments and viewing aids), and
Stryker Medical (specialty stretchers).
The new Neurotechnology and Spine division (18.2%) includes the
Neurovascular business (Target) acquired from Boston Scientific
(BSX), the spinal implant and interventional spine businesses and
the Leibinger Unit/Craniomaxillofacial (CMF) unit. The company
markets spinal implant products including cervical, thoracolumbar
and interbody systems used in spine injury, deformity and
degenerative therapies. The neurotechnology offering includes
products used for minimally invasive endovascular techniques, as
well as a comprehensive line of products for traditional brain and
open skull base surgical procedures, orthobiologic and biosurgery
products including synthetic bone grafts and vertebral augmentation
products, as well as minimally invasive products for the treatment
of acute ischemic and hemorrhagic stroke.
Stryker Corporation (SYK): Read the Full Research
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