Oppenheimer Comments On Stryker Earnings Announcement

Stryker SYK pre-announced 4Q 2010 revenue of $1.995B, ahead of Oppenheimer/Street estimates, led by continued strength in MedSurg and accelerated growth in hips/knees. Management raised ex-charge EPS guidance for FY10 to $3.31-3.33 from $3.27-3.30. According to Oppenheimer, for FY11, SYK expects constant currency growth of 11-13%. Ex-acquisition guidance of 5-7% constant currency sales growth is ahead of prior thinking. EPS guidance of $3.65-3.73 represents a 10-13% increase from 2010 levels, above Oppenheimer's previous $3.65. On the higher EBITDA outlook, it is raising the price target from $57 to $61. Oppenheimer's Outperform thesis is predicated on improvements in MedSurg on thawing of US hospital capital spending; better 2011 joint reconstruction performance with new product flow in hips and knees; increased gross margin flexibility as heavy compliance spend ends in mid-2011; balance sheet flexibility and greater product diversity than peers. Oppenheimer has a $61 PT on SYK SYK is trading higher at $58.37