SYK Stock: The MedTech Leader With Double-Digit Upside

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Stryker Stock Continues to Impress

The healthcare industry is transforming itself at a rapid pace. Given the rise in expenditure on healthcare and technological development, there is one area that would continue to post impressive growth in the future.

The medical device industry is booming with great potential in the coming years. There are many players in this field but one company stands out in particular. Investors of this stock stand to gain handsome returns in the near future.

Stryker Corporation (NYSE:SYK) is one of the leading medical technology firms in the world. The company builds medical devices and equipment. It is focused on orthopedics, medical and surgical equipment, and neurotechnology and spine implant devices.

Orthopedic products consist primarily of implants used in hip and knee joint replacements and those used in trauma and extremities surgeries. Surgeries can be made simpler and faster with the company’s advanced implant designs.

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Stryker supports surgeons with the technology they need as they develop new surgical techniques. Its market-leading products have resulted in SYK stock posting strong growth over the past years.

Medical and surgical (MedSurg) products include surgical equipment and other medical device products that are used in a variety of medical specialties. Neurotechnology and Spine products include neurosurgical and spinal implant devices.

Stryker has been consistently growing its sales and crossed the milestone of $12.0 billion in sales last year. With its advanced medical technology, it is able to bring to market novel implants for the knee, spine, and hip.

The changing medical technology landscape, use of software, and the emphasis toward portable devices are the emerging trends favorable to this MedTech company.

As per a recent report by Research and Markets, the global medical device market is expected to reach about $409.5 billion by 2023. It is expected to grow at a compound annual growth rate (CAGR) of 4.5% from 2018 to 2023. (Source: “Medical Device Market Report: Trends, Forecast and Competitive Analysis,” Research and Markets, last accessed September 27, 2018.)

The report also mentions that the major drivers of growth for the market are healthcare expenditure, developments in technology, population aging, and the rise of chronic diseases.

Stryker is well positioned to gain from these trends. It has a broad portfolio of popular products in the medical device market and is investing heavily in research and development to continue as the market leader. This bodes well for Stryker stock going forward.

SYK stock has been on an uptrend since the company posted impressive results for the second quarter. The medical implant maker posted upbeat results, with revenue growing by 10.3% to $3.3 billion.

The operating income margin was reported at 20.2%. Adjusted earnings per share increased by 15% to $1.76, which exceeded the high end of the guidance range.

Stryker also declared a quarterly dividend of $0.47 per share and that it would go ex-dividend on September 27, 2018.

The company has been growing actively through mergers and acquisitions, which has resulted in increased business and higher SYK stock prices.

Stryker recently announced that it would acquire Invuity Inc., which is a leading company in advanced photonics and designing instruments that help surgeons by enhancing visualization. Invuity’s products help in making surgeries safer.

The company had also announced plans to acquire K2M last month. It is a key player in the global spine market, which is valued at around $10.0 billion. The acquisition would help Stryker improve its presence with surgeons and patients in both the spine and related markets in neurotechnology. (Source: “Stryker announces definitive agreement to acquire K2M,” Stryker Corporation, August 30, 2018.)

The SYK stock has been inching upward consistently as shown in the following chart. Stryker stock has gained about 25% over the last one year and more than 170% in the last five years.

Given the growth in the medical device industry, the stock is expected to make double-digit gains in the coming years.

Chart courtesy of StockCharts.com

Analyst Take

Stryker Corporation is the leading company in medical devices. As the healthcare landscape evolves in the coming years, Stryker would benefit from the changes taking place. Given its impressive growth over the last years, investors should consider SYK stock for the long term.