U.S. stocks edge higher; solid earnings season continues
On Tuesday, BofA Securities expressed continued confidence in Stryker Corporation (NYSE:SYK), maintaining a Buy rating and a $450.00 price target on the medical technology company's shares. BofA Securities highlighted the firm's $4.9 billion deal for Inari Medical (TASE:PMCN).
According to BofA Securities, the first year following the deal would bring only a slight earnings per share (EPS) dilution, estimated at around 1-3%. The analysis predicts that by the second and third years, the impact on earnings would become neutral to accretive. The company's stock price had already begun to reflect some anticipated deal dilution, as observed by investors.
BofA Securities also mentioned a potential slight margin dilution from the deal, with the extent of the impact remaining uncertain. The firm suggests that Stryker may have the ability to mitigate these effects through other areas of its business operations.
The report further characterizes the acquisition as a typical move for Stryker, focusing on buying growth rather than targeting return on invested capital (ROIC) metrics. BofA Securities believes that such deals have historically aided Stryker's stock performance over the long term, as medical technology company valuations are closely tied to revenue growth.
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