Stryker Lowered 2017 Guidance on Lower Performance Expectations
As we discussed in the previous part of this series, Stryker received FDA warnings regarding some of its Sage Products. Consequently, Stryker recalled some of its Oral Care solutions and put a hold on the shipment of its cloth-based products manufactured by Sage. The suspended manufacturing and sales are likely to impact the company’s performance and growth in the subsequent quarters and fiscal 2017 as a whole. As a result, Stryker has revised its fiscal 2017 guidance, which was previously announced on July 27, with the release of the company’s 2Q17 earnings results. For the highlights of these 2Q17 earnings, read What We Should Know about Stryker’s 2Q17 Earnings.
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These kinds of events can also impact the iShares Edge MSCI Min Vol USA ETF (USMV), which invests ~1.4% of its total holdings in SYK.
Peers Zimmer Biomet Holdings (ZBH), Abbott Laboratories (ABT), and Medtronic (MDT) expect to register revenues of $7.8 billion, $26.5 billion, and $29.5 billion, respectively, in their current fiscal quarters.
As per the estimated impact of the event on the sales and earnings of the company, Stryker expects to register organic sales growth at the lower end of the previously provided range of 6.5% to 7% for fiscal 2017. Adjusted diluted EPS (earnings per share) are expected to come in at the lower end of the $6.45–$6.55 range.
In 3Q17, Stryker expects to register adjusted diluted EPS at the lower end of $1.50–$1.55 range. The acquisition of Novadaq announced on June 19, which is expected to complete on September 30, isn’t expected to have an impact on the company’s performance in 3Q17. For fiscal 2017, the Novadaq acquisition is expected to be dilutive to earnings by approximately $0.03–$0.05. For brief details about the acquisition, read Stryker Acquires Novadaq, Enhances Its Endoscopic Offerings.
Next, we’ll discuss the previously announced company guidance for fiscal 2017.