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 | 1964 | -2.57 |
Stryker Corporation: A Leader in Medical Technology
Stryker Corporation (NYSE:SYK), a prominent player in the medical technology sector, serves over 150 million patients annually with its innovative solutions in MedSurg, Neurotechnology, and Orthopaedics. As a global leader, Stryker competes with other major medical technology firms, continually striving to enhance patient care through its advanced products and services.
The recent announcement of Glenn S. Boehnlein's retirement as Vice President and Chief Financial Officer marks a significant transition for Stryker. Boehnlein's 22-year tenure saw him champion growth and talent development, leaving a lasting impact on the company. Preston Wells, who will succeed Boehnlein, brings a wealth of experience from his roles in Investor Relations and Enterprise Financial Planning & Analysis at Stryker, as well as his previous positions at Dialight Corporation and Johnson & Johnson.
Goldman Sachs recently maintained a Neutral grade for Stryker, recommending holding the stock. At the time, SYK was priced at $391.07, with Goldman Sachs raising the price target from $384 to $427. This reflects the market's high expectations for Stryker's future earnings growth, as evidenced by its price-to-earnings (P/E) ratio of 50.09. The company's price-to-sales ratio of 6.63 indicates investor confidence in its revenue-generating capabilities.
Stryker's financial metrics further highlight its strong market position. The enterprise value to sales ratio of 7.01 and the enterprise value to operating cash flow ratio of 41.26 suggest a robust valuation relative to revenue and cash flow. The company's earnings yield of 1.99% provides insight into shareholder returns, while a low debt-to-equity ratio of 0.28 indicates a conservative approach to debt management.
With a current ratio of 1.95, Stryker demonstrates a solid ability to meet short-term liabilities with its short-term assets. This financial stability, combined with the leadership transition to Preston Wells, positions Stryker to continue delivering strong results and maintaining its leadership in the medical technology industry.
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.
