Strong Segmental Performance to Drive Stryker's Q1 Earnings?

Stryker Corporation SYK is scheduled to release first-quarter 2025 results on May 1, after market close. In the last reported quarter, the company delivered an earnings surprise of 3.62%. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)

Q1 Estimates

The Zacks Consensus Estimate for earnings is pegged at $2.73 per share, indicating an increase of 9.2% year over year.

The consensus mark for revenues is pinned at $5.70 billion, implying growth of 8.8% from the prior-year reported figure.

Factors to Note

Stryker’s first-quarter performance is likely to have been driven by strong performance in the U.S. market, notably in Instruments, Medical, Endoscopy, Trauma and Extremities, and Mako. Strong International sales also buoy optimism, which is likely to have accelerated in the to-be-reported quarter.

The company's MedSurg and Neurotechnology segment witnessed substantial sales growth in the fourth quarter, driven by healthy growth in the Surgical Technologies and orthopedic implants businesses, especially for products like smoke evacuation, waste management, power tools and SteriShield. This trend is likely to have continued in the first quarter.

Stryker is also poised for significant growth, having had several launches in the past few months. In November, it launched two new products — the next generation of SurgiCount+ and the Oculan Lighting Platform. These two products are likely to have generated additional sales during the first quarter.

On its fourth-quarter earnings call, SYK stated that its commercialization of the Pangea Plating system is progressing well. Its LIFEPAK 35 defibrillator and monitor witnessed a strong order book, and sales have started to ramp up. The trend is likely to have continued in the first quarter as well.

The Osteotomy Truss System and the Ankle Truss System, launched in September, are likely to have boosted SYK’s Foot & Ankle portfolio with enhanced surgical precision and improved patient outcomes. Meanwhile, enhanced surgical precision and patient safety with the use of Spine Guidance 5 Software featuring Copilot might have driven adoption higher during the first quarter.

Apart from the launches, SYK is also strengthening its product portfolio with acquisitions. The company completed five acquisitions during the second half of 2024, including Vertos Medical in October, Care.ai and NICO Corporation in September, MOLLI Surgical in August, and Artelon in July. Vertos Medical and NICO added minimally invasive solutions for pain and hemorrhage procedures, respectively. While Care.ai strengthened its healthcare and IT offerings, Artelon added soft tissue fixation products and MOLLI’s portfolio boosted Stryker’s surgical solutions in breast cancer care. These acquisitions are likely to be accretive to the quarterly results.

The company acquired Inari Medical in February. On its first-quarter earnings call, it will likely provide updates related to the integration of these recently acquired businesses and their future impact on its performance.

Stryker Corporation Price and EPS Surprise

Stryker Corporation price-eps-surprise | Stryker Corporation Quote

Our estimate for the MedSurg and Neurotechnology, and the Orthopaedics & Spine segments’ sales is pegged at $3.75 billion and $2.57 billion, respectively. U.S. and international sales are estimated to be $4.74 billion and $1.59 billion, respectively.

Meanwhile, the ongoing pressure in China due to volume-based procurement policy and rising tariffs might have partially offset international growth. Stryker is working toward alleviating the ongoing inflationary pressure. It continued to recognize improved pricing and reduced cost pressure in the past couple of quarters. This is likely to have benefited gross margin during the first quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Stryker this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is -0.58% for SYK. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #4 (Sell) at present.

Stocks Worth a Look

Here are some medical product stocks worth considering as these have the right combination of elements to post an earnings beat this reporting cycle.

Agilent Technologies A has an Earnings ESP of +0.53% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

A’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.71%. The Zacks Consensus Estimate for fiscal second-quarter EPS implies a rise of 4.1% from the year-ago reported figure.

Globus Medical GMED has an Earnings ESP of +2.40% and a Zacks Rank of 3 at present. 

The company is scheduled to release first-quarter 2025 results on May 8. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.86%. The Zacks Consensus Estimate for EPS implies an improvement of 2.8% from the year-ago reported figure.

EDAP TMS EDAP has an Earnings ESP of +2.03% and a Zacks Rank #3 at present.

EDAP delivered a trailing four-quarter average negative earnings surprise of 5.69%. The Zacks Consensus Estimate for first-quarter EPS implies a decline of 23.1% from the year-ago reported figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research