Analysts at Deutsche Bank retain Buy rating on the shares of Stryker Corp. (NYSE: SYK) as they believe that while the end markets remain challenging, the latter has the right strategy for this environment to deliver above average growth. They raise the stock's price target to $64 from $61 to reflect their higher growth forecast.
DB analysts state that Stryker has diversified away from the mature hip or knee market acquiring faster growing and higher margin neurovascular technologies, focused on sensible tuck-in deals. They believe that the recent pull-back in the company's shares reflects the market's increasing concerns regarding the orthopedic markets. They state that Stryker is a well-diversified company, which provides balanced growth as was in the case in FY2011 Q2 with 6 percent organic growth. They expect the company to continue to focus on diversifying and focus on tuck-in deals that create value by levering existing strengths. They state that capital equipments represent 23 percent of its sales, and hips and knees are 31 percent of sales. They believe that the company can sustain 10 to 12 percent earnings per share growth. They raise the company's EPS estimates to $3.71, from $3.70 per share, and $4.14 from $4.08 per share, respectively. They add that the company's multi-year costs should mitigate industry-wide pricing pressure and allow for margin improvement. They state that the downside risks involving Stryker include greater than expected softness in the orthopedic business or pricing pressure, and significant reductions in hospital capital equipment spending.
On a year-to-date basis, Stryker has a share performance of -11.30 percent, and as compared to Standard & Poor's 500, it has an YTD share performance of -5.38 percent.
Stryker manufactures medical devices and medical equipments. It has a market capitalization of $18.48 billion with a P/E ratio of 15.11. It has a dividend yield of 1.50 percent.
Shares of Stryker added 0.44 percent or 21 cents to trade at $47.48 in the closing session.