Stryker Corporation SYK is scheduled to release first-quarter 2023 results on May 1, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 5.63%.
The Zacks Consensus Estimate for earnings is pegged at $2.00 per share, indicating an increase of 1.5% year over year.
The same for revenues stands at $4.55 billion, implying growth of 6.5% from the prior-year quarter’s reported figure.
Factors to Note
Stryker's MedSurg and Neurotechnology segment witnessed substantial sales growth on the back of its subsegments’ improvement in the fourth quarter. Increase in volumes of products contributed to the upside, which was partially offset by lower prices. This trend is likely to have continued in the first quarter.
Growth across Orthopaedics & Spine’s Hip, Knee, and Trauma and Extremities subsegments must have favored the segment's performance.
Stryker witnessed both domestic and international growth (in Japan, Korea and emerging markets) in the fourth quarter of 2022. It is committed to the sustained expansion of Mako, which reflects robust demand for this differentiated robotic technology. This heightened demand is likely to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. However, variability in the hospital environment may have offset some of the gains.
Stryker Corporation Price and EPS Surprise
Stryker Corporation price-eps-surprise | Stryker Corporation Quote
The company’s prospects for 2023 seem promising on the back of strong customer demand for its existing as well as new products. However, ongoing hospital staffing pressures and foreign currency movements are likely to have hurt its sales growth.
Procedural volumes in China may have suffered a negative impact owing to strict lockdown restrictions across major cities in the country. However, the impact of the economy’s recent reopening is yet to be seen. The current inflationary pressure is likely to have hurt SYK’s net margin, thereby limiting its growth.
Stryker is working toward alleviating the rising inflationary pressure. It is also taking several cost-cutting initiatives, including restructuring plans. Although these steps may help the company to boost its growth, they are also likely to drive expenses in the upcoming quarters. On SYK’s first-quarter earnings call, investors are likely to question the progress of these strategic initiatives and their impact going forward.
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 not the case here as you will see below.
Earnings ESP: Stryker has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #2.
Stocks to Consider
Here are a few medical stocks worth considering as these have the right combination of elements to come up with an earnings beat this reporting cycle:
Henry Schein HSIC has an Earnings ESP of +0.99% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HSIC has an estimated long-term growth rate of 8.1%. Henry Schein’s earnings surpassed estimates in three of the trailing four quarters and met the same once, the average surprise being 2.97%.
BioRad Laboratories BIO has an Earnings ESP of +0.16% and a Zacks Rank of 2 at present. BIO has an earnings yield of 3.3%, which compares favorably with the industry’s negative yield of 2.9%.
BioRad Laboratories’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 27.54%.
McKesson MCK has an Earnings ESP of +1.22% and a Zacks Rank #3 at present. MCK has an estimated long-term growth rate of 10.4%.
McKesson’s earnings surpassed estimates in two of the trailing four quarters and missed the mark in the other two, the average surprise being 3.42%.
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