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Stryker (SYK) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

Stryker Corporation SYK is scheduled to release fourth-quarter 2019 results on Jan 28 after the closing bell. In the last reported quarter, the company met estimates. Further, it has an average four-quarter positive surprise of 1.5%.

Which Way Are Estimates Trending?

The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $2.46, indicating an improvement of 12.8% from the year-ago quarter.

The same for revenues stands at $4.1 billion, suggesting growth of 8% from the prior-year quarter.

Let’s take a look at how things are shaping up prior to this announcement.

MedSurg in Focus

This segment consists of surgical instruments plus endoscopic and emergency medical equipment. Notably, it has been consistently driving Stryker’s top line.

Notably, the Zacks Consensus Estimate for the segment’s revenues for the fourth quarter stands at $1.83 billion, suggesting an improvement of 6.6% year-ago reported figure.

MedSurg has three subsegments — Endoscopy, Instruments and Medical.

Growth across its aforementioned three subsegments is likely to have benefited MedSurg’s fourth-quarter performance. The segment is anticipated to have witnessed considerable worldwide organic growth in the to-be-reported quarter driven by instruments.

Stryker Corporation Price and EPS Surprise

 

Stryker Corporation Price and EPS Surprise
Stryker Corporation Price and EPS Surprise

Stryker Corporation price-eps-surprise | Stryker Corporation Quote

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Other Factors at Play

The company’s fourth-quarter performance is likely to show broad-based strength across its divisions and regions. In fact, robust performance in emerging markets and Europe is expected to get reflected in the upcoming quarterly results.

Further, the company’s Orthopaedics segment is likely to have witnessed strong organic growth on the back of solid performance at the Knee and Hips sub segments. Moreover, sustained strong demand for Mako TKA (Total Knee Arthoplasty) platform or cementless knee and other 3D printed products is anticipated to get reflected in the segment’s fourth-quarter performance. For the quarter to be reported, the Zacks Consensus Estimate for this segment’s sales is pegged at $1.46 billion, indicating an improvement of 5.9% from the prior-year quarter.

With respect to Neurotechnology & Spine segment, a bankable performance within the NeuroTech and Interventional Spine businesses is likely to have contributed to the company’s fourth-quarter performance. Moreover, sustained solid demand in Europe, China and Japan might have impacted segmental growth, internationally. For the upcoming quarterly announcement, the Zacks Consensus Estimate for the segment’s sales stands at $798 million, suggesting year-over-year growth of 14%.

The company remains on track to achieve its full-year target of 30 to 50 basis points operating margin expansion backed by the top line and continued progress in cost transformation growth initiatives, a trend is likely to have continued in the fourth quarter.

However, unfavorable pricing is likely to have affected Stryker’s fourth-quarter top line. Moreover, high debt might have put pressure on the margins.

What Our Quantitative Model Suggests

Per our proven model, 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 the case here as you will see.

Earnings ESP: Stryker has an Earnings ESP of +0.60%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: Stryker carries a Zacks Rank #3.

Stocks to Consider

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Baxter International BAX has an Earnings ESP of +1.32% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

DexCom, Inc. DXCM has an Earnings ESP of +18.45% and a Zacks Rank #2.

Zimmer Biomet Holdings, Inc. ZBH has an Earnings ESP of +0.38% and a Zacks Rank #3.

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Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
 
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Stryker Corporation (SYK) : Free Stock Analysis Report
 
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