Strong Segmental Performance to Drive Stryker's Q4 Earnings?

Zacks
28 Jan

Stryker Corporation SYK is scheduled to release fourth-quarter 2024 results on Jan. 28, after market close. In the last reported quarter, the company delivered an earnings surprise of 3.24%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Q4 Estimates

The Zacks Consensus Estimate for earnings is pegged at $3.87 per share, indicating an increase of 11.9% year over year.

The consensus mark for revenues is pinned at $6.35 billion, implying growth of 9.2% from the prior-year reported figure.

Factors to Note

Stryker’s fourth-quarter performance is likely to have been driven by strong performance in the U.S. market, notably in Instruments, Medical, Endoscopy, Trauma and Extremities and Mako. Strong International sales also buoy optimism, which is likely to have accelerated in the to-be-reported quarter.

The company's MedSurg and Neurotechnology segment witnessed substantial sales growth in the third quarter on the back of increased unit volume and higher prices. Strong performances in the United States, Canada, Australia, the United Kingdom, New Zealand, Japan and most emerging markets also boosted revenues. This trend is likely to have continued in the fourth quarter.

Stryker is also poised for significant growth, having had several launches in the past few months. In November, it launched two new products — the next generation of SurgiCount+ and the Oculan Lighting Platform. These two products are likely to have generated additional sales during the fourth quarter. On its third-quarter earnings call, SYK stated that its commercialization of the Pangea Plating system is progressing well. Its LIFEPAK 35 defibrillator and monitor witnessed a strong order book, and sales have started to ramp up. The trend is likely to have continued in the fourth quarter as well.

The Osteotomy Truss System and the Ankle Truss System, launched in September, are likely to have boosted SYK’s Foot & Ankle portfolio with enhanced surgical precision and improved patient outcomes. Meanwhile, enhanced surgical precision and patient safety with the use of Spine Guidance 5 Software featuring Copilot might have driven adoption higher during the fourth quarter.

Apart from the launches, SYK is also strengthening its product portfolio with acquisitions. The company completed five acquisitions during the second half of 2024, including Vertos Medical in October, Care.ai and NICO Corporation in September, MOLLI Surgical in August, and Artelon in July. Vertos Medical and NICO added minimally invasive solutions for pain and hemorrhage procedures, respectively. While Care.ai strengthened its healthcare and IT offerings, Artelon added soft tissue fixation products and MOLLI’s portfolio boosted Stryker’s surgical solutions in breast cancer care. These acquisitions are likely to be accretive to the quarterly results. On its fourth-quarter earnings call, the company will likely provide updates related to the integration of these recently acquired businesses and their future impact on its performance.

Our estimate for the MedSurg and Neurotechnology, and the Orthopaedics & Spine segments’ sales is pegged at $3.75 billion and $2.57 billion, respectively. U.S. and international sales are estimated to be $4.74 billion and $1.59 billion, respectively.

Meanwhile, the ongoing pressure in China due to volume-based procurement policy might have partially offset international growth. Stryker is working toward alleviating the ongoing inflationary pressure. It continued to recognize improved pricing and reduced cost pressure in the past couple of quarters. This is likely to have benefited gross margin during the fourth quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Stryker this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is 0.00% for SYK. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3 at present.

Stocks Worth a Look

Here are some medical product stocks worth considering as these have the right combination of elements to post an earnings beat this reporting cycle.

BioLife Solutions BLFS has an Earnings ESP of +33.33% and a Zacks Rank #1 at present.  You can see the complete list of today’s Zacks #1 Rank stocks here.

BLFS is likely to release fourth-quarter 2024 results in March. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 44.63%. The Zacks Consensus Estimate for fourth-quarter EPS implies an improvement of 80% from the year-ago reported figure.

Maravai LifeSciences MRVI has an Earnings ESP of +10.00% and a Zacks Rank #2 at present. The company is expected to release fourth-quarter 2024 results in February.

MRVI delivered a trailing four-quarter average earnings surprise of 116.67%. The Zacks Consensus Estimate for fourth-quarter EPS implies a decline of 400% from the year-ago reported figure.

Perrigo PRGO has an Earnings ESP of +2.17% and a Zacks Rank #3 at present. The company is expected to release fourth-quarter 2024 results in February.

PRGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.41%. The Zacks Consensus Estimate for fourth-quarter EPS implies an increase of 7% from the year-earlier reported figure.

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Stryker Corporation (SYK) : Free Stock Analysis Report

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Maravai LifeSciences Holdings, Inc. (MRVI) : Free Stock Analysis Report

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