Post Earnings Coverage as Stryker's Quarterly Net Sales Soared 18.8%; Adjusted EPS Jumped 19.4%

Upcoming AWS Coverage on Medtronic

LONDON, UK / ACCESSWIRE / April 28, 2017 / Active Wall St. announces its post-earnings coverage on Stryker Corp. (NYSE: SYK). The Company disclosed its first quarter fiscal 2017 results on April 25, 2017. The medical technology Company outperformed sales and earnings expectations. Register with us now for your free membership at:

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One of Stryker's competitors within the Medical Appliances & Equipment space, Medtronic PLC (NYSE: MDT), is estimated to report earnings on May 30, 2017. AWS will be initiating a research report on Medtronic following the release of its next earnings results.

Today, AWS is promoting its earnings coverage on SYK; touching on MDT. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended March 31, 2017, Stryker's consolidated net sales increased 18.4% as reported 18.8% in constant currency to $2.96 billion compared to net sales of $2.50 billion for Q1 2016. Excluding the 10.6% impact of acquisitions, the Company's net sales in the reported quarter increased 8.2% in constant currency, including 9.2% from increased unit volume partially offset by 1.0% due to lower prices. The acquisition of Sage Products LLC and Physio-Control International, Inc. contributed $245 million to the Company's consolidated net sales. Stryker's sales numbers topped analysts' consensus of $2.91 billion.

For Q1 2017, Stryker's adjusted gross margin of 66.5% was down 150 basis points on a y-o-y basis. Compared to the year ago same period, the Company's gross margin was unfavorably impacted primarily by acquisitions as well as business mix and foreign currency. The Company's adjusted operating margin was 24.2% of sales for the reported quarter, essentially flat to the prior year's same quarter.

Stryker's reported net earnings of $444 million increased 10.4% compared to net earnings of $402 million in Q1 2016. The Company's earnings per diluted share of $1.17 increased 9.3% compared to earnings of $1.07 per share in the year earlier same quarter. Reported net earnings include certain charges for the amortization of purchased intangible assets, Rejuvenate and ABG II and other recall matters, restructuring-related activities and acquisition and integration related activities. Excluding the impact of these items, adjusted net earnings of $560 million increased 19.7%, while on per share basis it surged 19.4% to $1.48. The Company's earnings numbers surpassed Wall Street's estimates of $1.43 per share.

Segment Results

During Q1 2017, Stryker's MedSurg segment's net sales surged 36.2% on reported and 36.6% in constant currency basis to $1.31 billion. Excluding the 25.8% impact of acquisitions, net sales in the reported quarter increased 10.8% in constant currency, including 9.8% from increased unit volume and 1.0% due to higher prices.

Stryker's Orthopedics' net sales grew 7.4% in Q1 2017 to $1.14 billion, as foreign currency exchange rates negatively impacted net sales by 0.4%. Excluding the 0.6% impact of acquisitions, the segment's net sales in the reported quarter increased 7.2% in constant currency, including 9.9% from increased unit volume partially offset by 2.7% due to lower prices.

For Q1 2017, Stryker's Neurotechnology and Spine segment generated met sales of $0.52 billion, up 7.3% as reported and 7.7% in constant currency basis. Excluding the 2.4% impact of acquisitions, net sales in the quarter increased 5.3% in constant currency, including 6.3% from increased unit volume partially offset by 1.0% due to lower prices.

Balance Sheet & Cash Flow

As of March 31, 2017, Stryker maintained a strong position, with $3.3 billion of cash and marketable securities, of which approximately 85% was held outside the US. Total debt on the balance sheet at the end of Q1 2017 $7.2 billion. The Company generated cash from operations of approximately $151 million. During the reported quarter, Stryker completed a $230 million share repurchase, which will offset the impact of dilution in 2017.

Outlook

For Fiscal 2017, Stryker reaffirmed organic sales growth forecast to be in the range of 5.5% - 6.5% and adjusted net earnings per diluted share to be in the range of $6.35 - $6.45. For Q2 2017, the Company expects adjusted net earnings per diluted share to be in the range of $1.48 - $1.52. On the basis of current levels of foreign currency exchange rates, the Company is predicting net sales in Q2 2017 and FY17 to be negatively impacted by approximately 1.0% and adjusted net earnings per diluted share to be negatively impacted by approximately $0.03 to $0.04 in Q2 2017 and $0.10 to $0.12 for the fiscal year.

Stock Performance

At the closing bell, on Thursday, April 27, 2017, Stryker's stock slightly fell 0.60%, ending the trading session at $135.37. A total volume of 995.34 thousand shares were traded at the end of the day. In the last six months and previous twelve months, shares of the Company have surged 20.40% and 24.66%, respectively. Moreover, the stock gained 13.35% since the start of the year. The Company's shares are trading at a PE ratio of 31.11 and have a dividend yield of 1.26%. At Thursday's closing price, the stock's net capitalization stands at $50.15 billion.

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