RBC Lifts Stryker Price Target, Says Medtech Company Positioned For Growth

Meetings with Stryker Corporation’s SYK CEO inspired greater confidence in the company’s topline growth being sustainable into the foreseeable future, as well as near- and medium-term cost-saving opportunities, according to RBC Capital Markets.

The Analyst

RBC Capital Markets’ Brandon Henry maintained an Outperform rating on Stryker and raised the price target from $184 to $204.

The Thesis

The Fortune 500 medical technologies company seems well-positioned to generate revenue growth at the high end of its medtech peers into the medium term, Henry said in a Monday note. 

Stryker guided to 2019 organic sales growth of 6.5-7.5 percent, which was the highest initial revenue growth guidance provided by the company in around a decade, the analyst said. 

Stryker believes it could continue growing at around 250bps above market growth rates by focusing on product innovation and enabling its sales force, he said. 

The 2019 guidance assumes an operating margin expansion of around 30-50bps in 2019, Henry said, adding that there are “plenty of opportunities” to cut costs as the company shifts more toward shared services and improves procurement.

Stryker shares have appreciated around 19 percent year-to-date, outperforming medtech peers and the S&P 500. RBC recommends that investors buy shares on any pullback.

Price Action

Stryker shares were up 0.57 percent at $188.37 at the time of publication Monday. 

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