Stryker to Report Q2 Earnings: What's in the Cards?

Stryker Corporation SYK is scheduled to release second-quarter 2024 results on Jul 30, after market close. In the last reported quarter, the company delivered an earnings surprise of 6.38%.

Q2 Estimates

The Zacks Consensus Estimate for earnings is pegged at $2.79 per share, indicating an increase of 9.8% year over year.

The consensus mark for revenues is pinned at $5.41 billion, implying growth of 8.2% 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 the robust performance of its subsegments in the past two quarters. Strong performances in the United States, Canada, Australia, Europe, Japan and most emerging markets also boosted revenues. This trend is likely to have continued in the second quarter.

Growth across Orthopaedics & Spine's Hip, Knee, and Trauma and Extremities subsegments might have favored the segment's performance on the back of continued procedural growth, strong uptake of the Insignia Hip Stem and robust Mako sales.

Stryker is committed to the sustained expansion of Mako, reflecting robust demand for this differentiated robotic technology. This heightened demand, along with rising installations, is likely to have contributed to the Orthopaedics & Spine segment's performance in the soon-to-be-reported quarter. Moreover, an improving hospital budget is likely to have kept the order book strong.

SYK witnessed a very strong momentum for its 1788 camera system since its launch in September 2023. The strong initial uptake might have continued in the soon-to-be-reported quarter, thereby driving additional revenues. Moreover, the launch of the Gamma4 Hip Fracture Nailing System in Europe and the LIFEPAK 35 monitor/defibrillator in the United States is likely to have brought in additional revenues during the second quarter.

The Zacks Consensus Estimate for the MedSurg and Neurotechnology, and the Orthopaedics & Spine segments' sales is pegged at $3.12 billion and $2.29 billion, respectively. U.S. and international sales are estimated to be $3.98 billion and $1.39 billion, respectively.

The company's prospects in 2024 seem promising on the back of ongoing procedural recovery, a strong order book for capital equipment and an improvement in price, along with a strong pipeline of innovation. However, the ongoing pressure in China due to volume-based procurement policy is likely to have partially offset international growth.

Stryker is working toward alleviating the ongoing inflationary pressure. It continued to recognize improved pricing and reduced cost pressure in the past couple of quarters. This is likely to have benefited gross margin during the second quarter.

The company is also looking to expand its presence in the market through acquisitions. In June, it signed a deal to acquire Artelon, a privately held company specializing in innovative soft tissue fixation products for foot and ankle and sports medicine procedures. SYK may provide its integration synergies for SERF SAS on its second-quarter earnings call.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Stryker this time around. 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: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is 0.00% for SYK.

Zacks Rank: The company carries a Zacks Rank #3 at present.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this reporting cycle.

Phibro Animal Health PAHC has an Earnings ESP of +0.99% and a Zacks Rank of 2 at present.

The company's shares have surged 63% year to date. PAHC's earnings met estimates in the last reported quarter. Phibro Animal Health has a trailing four-quarter average negative earnings surprise of 2.30%.

IQVIA IQV has an Earnings ESP of +0.13% and a Zacks Rank of 2 at present.

Its shares have risen 3.6% year to date. IQV's earnings beat estimates in the last reported quarter. IQVIA has a trailing four-quarter average earnings surprise of 1.77%.

AxoGen AXGN has an Earnings ESP of +25.00% and a Zacks Rank of 3 at present.

The stock has risen 35.3% year to date. AXGN's earnings beat estimates in the last reported quarter. AxoGen has a trailing four-quarter average earnings surprise of 66.46%.

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