Stryker (SYK) At 52-Week High: What's Driving The Stock?

Share price of Stryker Corporation (NYSE:SYK) , headquartered in Kalamazoo, MI, scaled a new 52-week high of $141.21 on May 25, eventually closing a little lower at $140.85. The company has witnessed a consistent rally in its share price since the announcement of a better-than-expected performance in the first quarter of 2017 on Apr 25.

The company has gained 26.0% over the past one year, much better than the S&P 500’s 14.6%.

Average volume of shares traded over the last one year was remarkable at approximately 1091.8K. The stock has a market cap of $52.64 billion.

Comparison with Broader Industry

For the majority of the last one year, the company’s share price has considerably outperformed the Zacks categorized Medical - Productssub-industry. The stock has rallied 26.0% over this period, outshining the sub-industry’s return of 4.7%. The company’s five-year historical growth rate is also favorable at 9.3% as compared to 3.7% of the broader industry and 2.8% of the S&P 500 index.

Taking the stable performance of the stock into consideration, we expect Stryker to scale higher in the coming quarters.

Estimate Revision Trend

This Zacks Rank #3 (Hold) company’s estimate revision trend for the current year is favorable. Over the past 30 days, six estimates have moved up with no downward revision. The magnitude of estimate revision over the same time period increased around 0.2% to $6.42 per share.

Growth Catalysts

The market is particularly upbeat about the company’s first-quarter earnings and revenue performance wherein the company surpassed the Zacks Consensus Estimate on both the counts. Also, the strong year-over-year improvement in earnings and net revenue was encouraging.

The company's innovative product pipeline has continued to drive growth. Additionally, growing adoption of MAKO robotic-arm assisted reconstructive surgery should drive sales. MAKO is gradually transforming the field of orthopaedics, combining Stryker’s market-leading implants with MAKO’s proprietary robotic-arm technology.

We are also upbeat about the company’s promising guidance for 2017, which is indicative that this bullish trend will continue through the year. For the full year, the company expects adjusted earnings in the band of $6.35 to $6.45, much ahead of last year’s reported net adjusted earnings of $5.80. The organic revenue growth guidance is also impressive at the range of 5.5% to 6.5% for the full year 2017.

Another factor that has been helping the company maintain the momentum is the recent Sage deal that has extended the company’s offerings into intensive-care units and other hospital settings. Also, the addition of Synergetic’s neuro assets has strengthened Stryker’s competitive position in the neurotechnology & spine market.

Key Picks

A few better-ranked stocks in the broader medical sector are Luminex Corporation (NASDAQ:LMNX) , Inogen, Inc. (NASDAQ:INGN) and Edwards Lifesciences, Inc. (NYSE:EW) . Notably, Luminex and Inogen sport a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 7.8% over the last three months.

Inogen has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of around 87%.

Edwards Lifesciences has an expected long-term adjusted earnings growth of almost 16% (last 3–5 years of actual earnings). The stock added roughly 21% over the last three months.

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