On Monday, Stryker Corporation (NYSE:SYK), a healthcare equipment giant with a market capitalization of $149.49 billion, received an upgrade in its stock rating by a Morgan Stanley (NYSE:MS) analyst, moving from Equalweight to Overweight.
Accompanying this upgrade is a significant increase in the price target, now set at $445, up from the previous $370.
"Our hospital survey points to positive tailwinds for SYK in 2025," the analysts said.
The analyst's optimism is rooted in the findings of a hospital survey which suggests a favorable outlook for Stryker in the coming year. The survey results highlighted that Stryker's Mako orthopedic robots are continuing to lead in market share, now holding 37% compared to 34% in the previous survey. Additionally, a robust 68% of respondents indicated their intent to purchase the brand, only a slight decrease from 69% previously.
The survey also revealed that large-joint orthopedic volumes are performing better than expected in the second half of 2024, with a 24% increase compared to the 7% decrease that had been anticipated. This positive trend is in line with Stryker management's comments regarding an uptick in demand.
Capital expenditures (CAPEX) outlook for the hospitals surveyed remains consistent, with an expected increase of 3.5% for the next year. This forecast is closely aligned with the 4.0% increase reported in 2024. The steady CAPEX outlook is seen as a positive indicator for Stryker's business prospects.
The analyst's comments reflect a belief that these factors, including the market share growth of Stryker's Mako robots and the higher-than-expected orthopedic volumes, alongside a stable CAPEX environment, will provide positive tailwinds for the company in 2025.
In other recent news, Stryker Corporation has reported a significant 11.5% increase in organic sales growth for Q3, alongside a 16.7% year-over-year growth in adjusted earnings per share (EPS) at $2.87. The company has also completed several strategic acquisitions, including Care.ai and NICO Corporation, to enhance its healthcare IT and minimally invasive surgery offerings. Based on these developments, Stryker has revised its full-year 2024 guidance, now expecting organic sales growth of 9.5% to 10% and an adjusted EPS of $12 to $12.10.
Piper Sandler, an independent financial services firm, has maintained an Overweight rating on Stryker's shares, following a series of product demonstrations and discussions with the company's management. The firm's analyst projected that products like the LifePak 35 defibrillator and Pangea could significantly boost Stryker's revenue in the coming years. The analyst also expressed optimism about SG-5, Stryker's new imaging product designed for the spine division.
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