Stryker Corporation (Photo credit: Wikipedia)
Stryker
SYK : NYSE : US$61.87
BUY Target: US$69.00
COMPANY DESCRIPTION:
Stryker Corporation is a global developer, manufacturer and marketer of medical devices and instrumentations in the orthopedic and other medical specialties.
Investment recommendation
We reiterate our BUY rating following the release of Q4/12 results that were in line with preliminary numbers. Strong growth in US recon,
regardless of easy Y/Y comps, is encouraging as the company appears to be taking share and growing at above-market rates. European weakness
is expected to continue in the near term as new leadership and operating structures gain traction. We continue to view Stryker favorably given its diversified product offering and believe strength in recon, endoscopy and neuro/spine will continue throughout 2013.
Investment highlights
Stryker reported full-year sales results in line with preliminary figures, and EPS better than our and consensus expectations.
US hip and knee results were very strong, albeit against easy Y/Y comps, and indicate improving market momentum into 2013.
The Trauson acquisition is expected to close in the Q2/13 and management noted it anticipates leveraging the acquisition to more
broadly enter the value segments of the emerging markets globally.
Valuation
We are raising our price target to $69.00 from $64.00 as we transition to 2014 estimates. Our price target is derived from a 15.0x multiple
applied to our 2014 pro forma EPS estimate of $4.62.
