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What’s Stryker’s Guidance for 2018 and Beyond?



Guidance for 2018

During Stryker’s (SYK) 4Q17 and 2017 earnings release on January 30, 2018, the company provided its guidance for 2018. Let’s take a look at the company’s financial outlook for 2018 and 1Q18.

Stryker expects organic sales growth of 6%–6.5% for 2018. This growth is expected to be at the high end of the medical technology sector’s growth. The company expects its sales to see a positive foreign exchange impact of 1% in 2018. However, it expects pricing to be a headwind of 1%–1.5% to its 2018 sales.

Recent US tax reforms and acquisition dilution are expected to create headwinds for Stryker in 2018. However, the company expects strength in its top line and its continued operating margin expansion to drive robust earnings growth. 

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The company expects to report adjusted diluted EPS (earnings per share) of $7.07–$7.17 in 2018. Its Entellus acquisition, which is expected to close in 1Q18, is expected to dilute its EPS by $0.04 in 2018. During the acquisition announcement, Stryker stated its plans to buy back $300 million worth of shares to offset this earnings dilution. It also announced that it would continue to invest in IT (information technology) infrastructure and operations, including ERP (enterprise resource planning) implementation.

Quarterly guidance

In 1Q18, Stryker expects robust sales driven by growth across all business segments, robust product cycles, strong sales and marketing execution, and acquisition benefits. The company expects to register adjusted diluted EPS of $1.57–$1.62 in 1Q18. This estimate includes the impact of US tax reform, currency exchange, and dilution from the Entellus acquisition.

According to Wall Street analysts’ consensus estimates for 2018, peers Zimmer Biomet Holdings (ZBH), Abbott Laboratories (ABT), and Baxter International (BAX) are expected to generate sales of $8 billion, $30.9 billion, and $11.2 billion, respectively, in 2018.


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