What We Should Know about Stryker's 2Q17 Earnings

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What We Should Know about Stryker's 2Q17 Earnings PART 1 OF 3

Stryker Exceeded Analysts’ Sales Estimates in 2Q17

Stryker released its 2Q17 earnings results

On July 27, 2017, Stryker (SYK) released its 2Q17 earnings. The company reported strong earnings and exceeded analysts’ expectations. However, on the day of the release, Stryker stock fell approximately 1.3% from the closing price of $145.70 on July 26, 2017. Notably, Stryker also raised its 2017 guidance during the 2Q17 earnings announcement.

Stryker Exceeded Analysts’ Sales Estimates in 2Q17

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2Q17 sales results

In 2Q17, Stryker earned revenue of ~$3.0 billion. It registered strong growth of ~6.1% on a YoY (year-over-year) basis and exceeded analysts’ estimates of $2.98 billion in revenues.

The currency-neutral sales growth for the quarter came in at 6.9% on a YoY basis. The growth included a 0.20% acquisitions contribution and a negative pricing impact of around 1.5%. The company’s organic revenue growth was thus around 6.7%. Stryker’s sales growth was driven by strong results across all three of its business segments: Orthopaedics, MedSurg, and Neurotechnology and Spine. The company continued to witness strong results in Canada and Europe led by its Transatlantic Operating Model (or TOM). For brief details on TOM, read How Stryker Plans to Capture the International Markets.

Segment-wise revenues

Organic sales growth of 6.7% for Stryker’s MedSurg segment was driven by strong instrument sales in the United States. Its Orthopaedics segment witnessed strong sales growth of 6.2%. Orthopaedics sales were driven by strong knee sales as well as strong trauma and extremities sales, led by the strong demand for Stryker’s 3D-printed products, including its Triathlon Knee and foot and ankle portfolio. Neurotechnology and Spine sales registered an organic growth of around 7.9%, which was mainly led by strong momentum across the company’s neurotechnology portfolio. Spine sales continued to be impacted by supply issues in the United States

Sales in the United States rose approximately 7.2%, and international sales rose approximately 5.5%. International sales witnessed strong contributions from Europe and Australia, while emerging markets continued to recover.

Stryker’s peers Zimmer Biomet Holdings (ZBH), Thermo Fisher Scientific (TMO), and Abbott Laboratories (ABT) earned revenues of about $1.9 billion, $5.0 billion, and $6.6 billion, respectively, for their recently ended quarters. For exposure to Stryker’s growth potential, you can invest in the iShares Core S&P 500 (IVV), which holds approximately 0.21% of its total holdings in SYK.


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