Credit: Shutterstock photoStryker CorporationSYK recently completed the acquisition of Muka Metal, A.S. ("Muka"). Notably, in Jul 2015, Stryker had announced the signing of a definitive agreement with this Turkey-based manufacturer and marketer of hospital beds, stretchers and related patient room furniture and accessories.
The takeover will significantly expand Stryker's presence in Turkey as well as Latin America, where Muka Metal enjoys a significant hold. The deal, however, is expected to prove neutral to 2015 earnings.
Stryker has been following an acquisition-driven approach to improve its growth profile. Over the last three years, the company has cut several targeted deals (10 companies) that have largely expanded its product portfolio across all three business segments.
It is to be noted that most of these acquisitions have provided products that are complementary to Stryker's existing product line. In the second quarter of 2015, acquisitions accounted for 0.7% of the constant currency revenue growth of 7.6%.
In Jan 2015, Stryker acquired the assets of privately-held CHG Hospital Beds - a seller of innovative hospital beds across Canada, the U.S. and the U.K.
In Mar 2014, Stryker completed a series of acquisitions like that of Irvine, CA-based Patient Safety Technologies and Sunnyvale, CA-based developer of hip arthroscopy products, Pivot Medical, Inc. Notably, Pivot's offerings contributed to Stryker's existing Sports Medicine product suite.
Thereafter, in April, 2014, Stryker took over Berchtold which helped boost its fast growing endoscopy division and operating room equipment product portfolio. Following that, in August, Stryker purchased the North American assets of Small Bone Innovations - a manufacturer of products for upper and lower extremity small bone indications.
In Dec 2013, Stryker closed the MAKO Surgical takeover in a bid to gain access to the latter's advanced robotic arm technology, Robotic Arm Interactive Orthopedic System (RIO). The buyout helped Stryker gain a competitive edge in the hip-and-knee replacement market.
While the impressive string of buyouts improves revenue opportunities, it adds to integration risks and is also putting gross and operating margins under pressure. Frequent acquisitions may also impact the company's balance sheet in the form of a high level of goodwill and intangible assets, which totaled $6.1 billion or 36% of Stryker's total assets as of Jun 30, 2015.
Zacks Rank & Other Key Picks
Currently, Stryker has a Zacks Rank #2 (Buy). Other well-placed stocks in the medical sector are Masimo MASI , Thoratec THOR and NuVasive NUVA . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
