Morgan Stanley Upgrades Stryker to Overweight Amid Positive Outlook for 2025 Growth
Morgan Stanley analysts upgraded Stryker (NYSE:SYK) from Equalweight to Overweight, raising their price target from $370 to $445. The decision was based on favorable survey data and encouraging trends in orthopedic demand and capital expenditure.
The analysts highlighted findings from a hospital survey that suggested positive momentum for Stryker heading into 2025. Stryker’s Mako robotic system remained a leader in the orthopedic robotics market, showing slight share growth, increasing to 37% from 34% in a prior survey. A strong 68% of respondents indicated plans to purchase the Mako system, demonstrating consistent interest.
Large-joint orthopedic volumes were reported to be exceeding expectations in the second half of 2024, with 24% of respondents noting volumes above forecasts compared to only 7% indicating they were below. This trend aligned with Stryker management's commentary on rising demand.
Additionally, survey respondents pointed to a stable capital expenditure outlook, projecting a 3.5% increase in 2025, which closely matched the 4.0% growth reported in 2024. This consistency in spending is expected to benefit Stryker’s performance as the company capitalizes on these favorable market dynamics.
| Symbol | Price | %chg |
|---|---|---|
| 048260.KQ | 1901000 | 0 |
| 287410.KQ | 12900 | 0 |
| 085370.KQ | 36700 | 0 |
| 6849.T | 2030.5 | 0.66 |
Stryker Upgraded to Buy at BofA Securities
BofA Securities analysts upgraded Stryker (NYSE:SYK) from a Neutral rating to a Buy, while also raising the price target from $310.00 to $315.00.
The analysts' rationale for the upgrade centers on several factors, including Stryker's improved outlook on profit margins, a positive product cycle that could boost revenue growth, strong capital visibility through 2024, a favorable orthopedic segment outlook, and the potential for enhanced operating margins, which could lead to a 2% increase in earnings per share.
As a result, the new price target reflects the same 27x multiple for 2024 earnings but with slightly higher expected EPS.
Stryker Shares Down 2% Despite Q1 Beat & Raised Outlook
Stryker (NYSE:SYK) shares were trading more than 2% lower intra-day today despite the company posting strong Q1 earnings and raising its 2023 outlook.
Q1 EPS came in at $2.14, better than the Street estimate of $2.01, driven by broad-based growth, especially in Orthopedics. Revenue was $4.8 billion, beating the Street estimate of $4.56 billion.
The company raised its 2023 organic sales growth outlook to 8.50% at the midpoint (range: 8.0–9.0%) and EPS guidance to $10.15 at the midpoint, ahead of the Street’s 7.3% and $10.03, respectively.
Management expects the strong business momentum to continue throughout the rest of the year with a strong order book and a “super cycle” of new products.
