Stryker
(NYSE:SYK)
handily beat Wall Street expectations during its first quarter, though its guidance range increase may have disappointed investors.
The morning after Stryker’s earnings announcement, SYK shares were down more than 1% to $294.12 apiece. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up slightly.
The orthopedic and surgical device giant earned $592 million, or $1.54 per share, off of $4.78 billion for the quarter ended March 31, 2023. The bottom line was up 83.3%, and the top line was up 11.8% compared with the same quarter a year ago.
Adjusted to exclude one-time items, Stryker’s EPS was $2.14. The result was 14¢ ahead of The Street, where the analyst consensus was EPS of $2 and revenue of $4.56 billion.
“Demand remains strong for our products, and supply chain pressures are gradually improving,” CEO Kevin Lobo said in a news release.
Stryker upped its 2023 guidance to 8–9% sales growth and adjusted EPS of $10.05–10.25. According to BTIG analysts, the whisper estimates on The Street predicted 13% organic growth.
During the company’s earnings call, Lobo defended the guidance raise. Analysts questioned whether it was too cautious given the strong early-year momentum.
“We are not completely out of the woods on supply chain issues, which can cause uncertainty. Launches have to actually occur on time and be able to deliver what we hope they can deliver,” Lobo said.
Analysts stay positive over Stryker earnings
BTIG analysts said Lobo faced a high bar, with whisper estimates looking for roughly 13% organic growth. They kept their Buy rating on SYK shares
Stryler officials also said they were unworried about health providers increasingly deciding to rent Stryker’s Mako robotic surgery systems versus buying them. Lobo later added that Mako rentals often convert within a year or two into a purchase.
“Honestly, rentals have been part of our plan. And so as we look at sort of how we’re attacking the market, we’re focused on placements,” said Stryker CFO Glenn Boehnlein.
This year could be a boom year for the orthopedic device market. The space is benefitting from a bounce-back of procedures as the COVID-19 situation normalizes.
Also today, Stryker announced it has completed its acquisition of Cerus Endovascular, which designs and develops neurointerventional devices for the treatment of intracranial aneurysms.
This story originally ran on May 1, 2023. Updated May 2 with next-day stock price and news of a completed acquisition.