Stryker’s 4Q15 Revenues Expected to Witness Growth


Jan. 13 2016, Updated 1:07 p.m. ET

Stryker’s revenue estimates

On January 26, 2016, Stryker (SYK) will announce its 4Q15 earnings for the period ending December 31, 2015. Wall Street has estimated Stryker’s 4Q15 revenues to be about $2.7 billion, representing a growth of around 3.6% on a YoY (year-over-year) basis compared to 1.3% YoY revenue growth in the last quarter. Stryker is further expected to witness 5% in growth as per revenue estimates for 1Q16.


Stryker has provided a guidance of 6.5%–7.5% growth in annual sales on constant currency for 2015. This is significantly higher than the sales expectations of its major competitor Zimmer Biomet Holdings (ZBH) at 1.5%–2% and lower than the 7%–16% sales guidance provided by Edward Lifesciences (EW).

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The graph above shows that analysts expect Stryker’s revenues to witness a rise at about $2.7 billion in 4Q15. These estimates primarily account for the spine, trauma, and extremities segment growth that’s driven by new product launches, higher hip and knee segment sales boosted by growth in sales of MAKO robots, and more market share. Analysts have also projected a fall in total revenues for Stryker in 1Q16 on account of weak international sales, continued pricing pressures, and persisting currency headwinds.

Net earnings expected to rise

Wall Street projected a rise in revenues along with improvement in net profit margins estimated at $583.1 million, representing a YoY net profit margin growth of around 12.5% in 4Q15. Significant investments made in strategic M&A (merger and acquisition) deals by the company are expected to generate sales growth and improve margins. Also, high margin product lines such as MAKO robots and Neptune waste management products witnessed significant growth in the previous quarter and were expected to lead further expansion in margins and higher sales.

In 4Q15, Stryker is expected to register a net profit margin of about 21.5%, or lower than the projected net profit margin of 22.2% for Johnson and Johnson (JNJ), but higher than the estimated margin for Zimmer Biomet (ZBH) and Medtronic of about 19.4% and 21.1%, respectively.

The Health Care Select Sector SPDR Fund (XLV) has around 13% exposure to the medical device industry. Stryker accounts for around 1.1% of the total holdings of XLV.


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