A Look at Stryker’s Updated Guidance for 2016


Aug. 24 2016, Updated 2:04 p.m. ET

2016 guidance

Stryker (SYK) expects its 2016 revenue to witness a YoY (year-over-year) rise of 6%–6.5% on an organic basis. Currency headwinds are expected to have a negative impact of around 1% on 2016 sales. This is in line with the currency headwinds guidance provided by the company in the previous quarter.

Pricing pressures continue to impact the company’s sales and are expected to register a 1.5%–2% drag on its 2016 sales.

SYK’s recent acquisitions of Physio-Control and Sage Products are also expected to contribute to Stryker’s 2016 sales. In 2H16, Physio-Control’s business is expected to report high single-digit growth, and Sage Products’ sales are estimated to register double-digit growth.

For 2H16, Stryker’s gross margin is estimated to be around 67% of its total sales.

Stryker expects to see 2016 EPS (earnings per share) in the range of $5.7–$5.8. This compares to its previous 2016 EPS guidance of $5.65–$5.80. The negative foreign exchange impact is expected to be around $0.03.

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Quarterly guidance

Stryker’s 3Q16 revenue is expected to witness weakness. The company expects to continue to deal with supply headwinds due to the supply challenges in its spine business. It also expects distribution challenges in its MedSurg business in China to continue through the rest of 2016. These factors will affect Stryker’s 3Q16 sales.

However, the negative impact of currency headwinds is expected to be negligible in 3Q16. The company’s adjusted EPS guidance for 3Q16 is in the range of $1.33–$1.38, compared to $1.39 in 2Q16.

According to analysts’ projections for 2016, Stryker’s competitors Zimmer Biomet (ZBH), Abbott Laboratories (ABT), and Becton, Dickinson and Company (BDX) can expect to earn revenue of $7.7 billion, $20.9 billion, and $12.5 billion, respectively, in 2016.

Investors seeking exposure to Stryker can invest in the iShares Dow Jones U.S. ETF (IYY). IYY has exposure of around 0.16% to SYK.


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