Stryker Stock Gains on Q3 Earnings Beat & Raised Guidance

Stryker Corporation SYK reported third-quarter 2024 adjusted earnings per share (EPS) of $2.87, which beat the Zacks Consensus Estimate of $2.78 by 3.2%. The bottom line also improved 16.7% year over year.GAAP EPS was $2.16, up 20% from the year-ago quarter’s level.Revenue DetailsRevenues totaled $5.49 billion, beating the Zacks Consensus Estimate by 2.3%. The top line also improved 11.9% on a year-over-year basis and 12% at constant currency (cc).Revenues by GeographyRevenues in the United States amounted to $4.11 billion, up 11.7% from the prior-year quarter. International sales increased 12.5% year over year to $1.39 billion.Segmental AnalysisMedSurg and Neurotechnology: This segment reported sales of $3.22 billion, up 12.8% year over year and 12.9% at cc. Sales growth was driven by increased unit volume and higher prices.Orthopedics and Spine: Sales in the segment amounted to $2.27 billion, up 10.7% year over year and 10.8% at cc. This growth was driven by increased unit volume as well as higher prices.In the quarter, MedSurg and Neurotechnology recorded organic sales growth of 12.7%, which included 13.2% of U.S. organic growth and 11.2% of international organic growth. Instruments recorded U.S. organic sales growth of 9.9% led by strong double-digit growth in the surgical technologies business.Stryker Corporation Price, Consensus and EPS Surprise Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation QuoteMarginsAdjusted gross profit totaled $3.54 billion in the reported quarter, up 11.5% from the year-ago quarter’s level. However, adjusted gross margin contracted 20 basis points (bps) to 64.5%.Total operating expenses were $2.43 billion, up 9.2% from the year-ago quarter’s level.Adjusted operating income totaled $1.36 billion, up 18.1% from a year ago. Adjusted operating margin was 24.7%, up 130 bps.Financial UpdateStryker exited the third quarter with cash and cash equivalents of $4.68 billion compared with $1.96 billion at the second quarter of 2024-end.Cumulative net cash provided by operating activities totaled $2.31 billion compared with $2.18 billion a year ago.2024 GuidanceStryker updated its guidance for 2024. The company now expects total revenues to grow in the range of 9.5%-10.0% on an organic basis compared with the earlier guidance of 9.0%-10.0%. The Zacks Consensus Estimate for total revenues is pegged at $22.4 billion, implying growth of 9.2%. Based on the steady progress of the company’s pricing actions, it expects a favorable pricing impact in the range of 0.5% to 1.0%.SYK now expects adjusted EPS in the band of $12.00-$12.10 compared with the previously expected range of $11.90-$12.10. The Zacks Consensus Estimate for earnings is pegged at $12.00 per share.If foreign exchange rates hold near current levels, the company anticipates a moderately unfavorable impact on full-year net sales.Wrapping UpStryker exited third-quarter 2024 on a strong note, wherein earnings and revenues beat the Zacks Consensus Estimate. The company witnessed a strong performance in the U.S. market, notably in Instruments, Medical, Endoscopy, Trauma and Extremities and Mako. Strong International sales also buoyed optimism. SYK expects the momentum in the international market to accelerate in the rest of 2024.Shares of SYK gained 3.3% during after-market trading following its promising quarterly performance as well as a better outlook for 2024. The company’s shares have gained 20.7% year to date compared with the industry’s rise of 13.9%. The broader S&P 500 Index has increased 22.6% in the same time frame.Stryker is set to expand through strategic mergers and acquisitions in 2024. In October, SYK completed the acquisition of Vertos Medical, which provides minimally invasive solutions for treating chronic lower back pain and enhances the company’s pain management portfolio.  In September SYK acquired Care.ai, strengthening its healthcare, IT and wirelessly connected offerings. The company also acquired NICO Corporation which enables minimally invasive surgery for tumor and intracerebral hemorrhage procedures. In August, SYK completed 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.On its third-quarter earnings call, SYK stated that its commercialization of the Pangea Plating system is progressing well, with a full launch expected in the U.S. by the second half of 2025. SYK’s LIFEPAK 35 defibrillator and monitor witnessed a strong order book and sales have started to ramp.Additionally, the company has started early cases with the Spine Guidance 5 Software featuring Copilot, which enhances surgical precision and patient safety with smart powered instruments. This innovation is a key milestone in Stryker's development pipeline, with Mako Spine featuring Copilot and Mako Shoulder set to be launched in the fourth quarter.Moreover, the expansion in operating margin is reassuring. However, stiff competition in the MedTech space is a concern.Image Source: Zacks Investment ResearchSYK’s Zacks Rank and Key PicksStryker currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader medical space are Addus HomeCare ADUS,  Quest Diagnostics DGX  and RadNet RDNT. While Addus HomeCare sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and RadNet carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Addus HomeCare has an estimated long-term growth rate of 12.1%. ADUS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 11.5%.Addus HomeCare shares have rallied 85.5% compared with the industry's 16.9% growth year to date.Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average being 3.3%.Quest Diagnostics has gained 42% compared with the industry's 14.9% growth year to date.RadNet’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 98.2%.RDNT's shares have surged 93.7% year to date compared with the industry’s 14.8% growth.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quest Diagnostics Incorporated (DGX): Free Stock Analysis Report Stryker Corporation (SYK): Free Stock Analysis Report Addus HomeCare Corporation (ADUS): Free Stock Analysis Report RadNet, Inc. (RDNT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks