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Will Stryker (SYK) Disappoint this Earnings Season? - Analyst Blog

Stryker Corp ( SYK ) is set to report fourth-quarter 2015 results on Jan 27. Last quarter, the company reported earnings of $1.15 per share, which beat the Zacks Consensus Estimate by a penny.

Let's see how things are shaping up for this quarter.

Factors this Past Quarter

Stryker's preliminary fourth quarter and full year 2014 results reflect growing concern over a strong U.S. dollar. The company estimates fourth quarter and full year adjusted earnings in the range of $1.43-$1.45 and $4.72-$4.74 per share, respectively.

The fourth quarter includes a negative foreign exchange impact of roughly 6 cents per share, while the full year is hurt by a negative impact of around 15 cents per share. Given the adverse impact of recent foreign currency movements, Stryker expects 2015 adjusted earnings to be impacted by roughly 20 cents a share.

However, the company estimates strong organic revenue growth of 5.5% and 5.8% for the fourth quarter and full year, respectively. Fourth-quarter revenues are projected to grow 6.1% (or 8.6% in constant currency) year over year to $2.6 billion. The company estimates revenues of $9.7 billion for full-year 2014.

The projected revenue upside can be primarily attributed to robust sales growth at the MedSurg segment. Additionally, Stryker sold 20 Mako Rio Robotic Arm Interactive Systems in the fourth quarter which drove results at the Orthopedics segment.

Earnings Whispers?

Our proven model does not conclusively show that Stryker is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or at least 3 for this to happen. That is not the case here as you will see below.

Zacks ESP : Stryker has a -0.69% ESP. That is because the Most Accurate estimate stands at $1.44 per share, which is lower than the Zacks Consensus Estimate of $1.45.

Zacks Rank : Stryker carries a Zacks Rank #4 (Sell).

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are a number of stocks worth considering that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Hologic ( HOLX ) with an Earnings ESP of +2.78% and a Zacks Rank #1 (Strong Buy).

AbbVie ( ABBV ) with an Earnings ESP of +1.18% and a Zacks Rank #2 (Buy).

IntersectENT ( XENT ) with an Earnings ESP of +11.11% and a Zacks Rank #2.

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INTERSECT ENT (XENT): Free Stock Analysis Report

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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.

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