On Wednesday, Canaccord Genuity maintained a Buy rating on Stryker (NYSE: SYK) and increased the price target to $400 from $360. The firm recognized Stryker's significant third-quarter performance, which included an 11.9% reported growth. The company's results led to an upward revision of its top and bottom line guidance, underpinned by robust capital demand and procedure volumes.
Stryker's orthopedics division outperformed its competitor Johnson & Johnson (NYSE: JNJ), which reported a 1.7% worldwide growth compared to Stryker's 10.7%. The company's knees, hips, and trauma & extremities segments experienced double-digit growth in the quarter, particularly hips, which surpassed expectations. The MedSurg & Neurotech segments also saw double-digit growth across almost all subsegments, with the exception of Neurovascular.
The company highlighted a record number of global installations of its Mako robotic-arm assisted surgery system in the third quarter, alongside high utilization rates. Although growth was partly driven by rentals, the backlog for capital equipment remains elevated. Stryker has also initiated the use of its new spinal enabling technology ecosystem, which includes Mako Spine, Copilot, and Q Guidance 5 software, and plans to keep these technologies in limited market release for training purposes.
Looking ahead, Stryker anticipates the full launch of its Pangea plating system in the United States in the second half of 2025 and has reported a strong order book for its Lifepak35 defibrillator. The company's strategy continues to prioritize mergers and acquisitions as its primary method for cash allocation.
Canaccord Genuity's stance on Stryker is optimistic, citing the company's ability to sustain high-end growth within the MedTech sector and its multiple strategies for driving operational efficiencies, including an expected 200 basis points adjusted operating margin expansion by the end of 2025. With these factors in mind, the firm has raised its price target for Stryker's shares.
In other recent news, Stryker Corporation (NYSE:SYK) has reported higher than expected third-quarter earnings and revenue. The medical technology company's adjusted earnings per share were $2.87, surpassing the analyst consensus by $0.10. Revenue for the quarter was $5.49 billion, exceeding estimates of $5.37 billion and marking an 11.9% year-over-year increase. This growth was largely due to an 11.5% rise in organic net sales, with the MedSurg and Neurotechnology segment leading the growth with a 12.8% increase in net sales to $3.2 billion.
Following these developments, Stryker has revised its full-year 2024 outlook upward. The company now anticipates organic net sales growth of 9.5% to 10.0% and adjusted earnings per share in the range of $12.00 to $12.10. This is slightly ahead of the previous analyst consensus of $12.01.
BTIG has maintained a Buy rating on Stryker and raised its shares target to $394 from $383 in response to the company's third-quarter results. The firm has also highlighted opportunities for Stryker to improve its operating margins, suggesting a potential expansion of approximately 100 basis points or more in fiscal year 2025.
InvestingPro Insights
Stryker's strong performance and optimistic outlook are further supported by recent InvestingPro data. The company's revenue growth of 9.94% over the last twelve months as of Q2 2024 aligns with the robust growth highlighted in the article. Additionally, Stryker's EBITDA growth of 13.96% during the same period underscores its operational efficiency and profitability improvements.
InvestingPro Tips reveal that Stryker has raised its dividend for 29 consecutive years, reflecting a commitment to shareholder returns that complements its growth strategy. This is particularly noteworthy given the company's focus on mergers and acquisitions for cash allocation.
Another relevant InvestingPro Tip indicates that Stryker's earnings per share have been on an upward trend, which supports the positive guidance revision mentioned in the article. These insights, along with 14 additional tips available on InvestingPro, provide a comprehensive view of Stryker's financial health and market position.
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