Stryker Corporation SYK recently announced the completion of the acquisition of NICO Corporation, a privately held company providing a systematic approach to minimally invasive surgery for tumor and intracerebral hemorrhage (ICH) procedures.
As a result of the acquisition, Stryker is likely to strengthen its portfolio of solutions for tumor resection and the treatment of ICH.
Likely Trend of SYK Stock Following the News
Following the announcement, shares of the company closed nearly flat at $364.81 on Friday.
Stryker, as a leading player in the global orthopedic market, is gaining organically through research and development leading to strategic product launches. The company also follows an acquisition-driven strategy to broaden its product portfolio. Accordingly, we anticipate the stock to gain investors’ optimism around this latest strategic decision to acquire NICO.
Meanwhile, SYK currently has a market capitalization of $139.03 billion. It has an earnings yield of 3.29%, much higher than the industry’s yield of 0.74%. In the last reported quarter, SYK delivered an earnings surprise of 0.72%.
More on the SYK’s Acquisition News
ICH, or bleeding in the brain caused by a ruptured blood vessel, affects a significant number of people annually around the world, especially the aging population. ICH has high morbidity and a 30-day mortality rate ranging from 40% to 50%. NICO’s BrainPath and Myriad products enable a treatment option for ICH with improved functional outcomes compared to guideline-based medical management alone, the current standard of care.
The acquisition of NICO is likely to expand Stryker’s portfolio of solutions for tumor resection and the treatment of ICH.
More on Stryker’s Past Acquisitions
Stryker has been following an acquisition-driven strategy to boost its growth profile.
Recently, the company inked two deals to acquire care.ai and Vertos Medical. While care.ai is likely to add artificial intelligence (AI)-assisted virtual care workflows, smart room technology and ambient intelligence solutions, Vertos Medical will expand SYK’s minimally invasive pain management portfolio with differentiated treatments.
In August, Stryker announced the completion of the acquisition of MOLLI Surgical Inc., a privately held company specializing in the development of wire-free soft tissue localization technology for breast-conserving surgery. As a result of the acquisition, MOLLI’s portfolio is likely to boost Stryker’s commitment to advancing surgical solutions in breast cancer care.
In July, Stryker completed the previously announced acquisition of Artelon, a privately held company specializing in innovative soft tissue fixation products for foot and ankle and sports medicine procedures. The acquisition highlighted Stryker's commitment to providing distinctive ligament and tendon reconstruction solutions and strengthening the company's product line in the soft tissue fixation sector.
Per management, these buyouts continue to represent Stryker’s focus on its strategy of boosting category leadership and market-leading growth.
Industry Prospects in Favor of SYK
Per a report by Data Bridge Market Research, the global hemorrhagic stroke treatment market was estimated to be $34 billion in 2021 and is anticipated to witness a CAGR of 7.8% from 2022 to 2029 and reach beyond $62.01 billion by 2029.
Given the market potential, Stryker’s acquisition of NICO is likely to boost the company’s business and generate additional revenues.
SYK’s Price Performance
For the past six months, SYK shares have rallied 3.9% compared with the industry’s rise of 9.4%. The S&P 500 increased 9.4% in the same time frame.
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SYK’s Zacks Rank & Stocks to Consider
SYK carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader medical space are Universal Health Service UHS, Quest Diagnostics DGX and ABM Industries ABM. While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.
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