A new Seeking Alpha report addresses where growth and acquisition opportunities might shine the brightest for Stryker. The orthopedics company has been one of the better performing companies this year with solid revenue growth and share prices going up.
"Looking ahead, I'm still not wild about the valuation, but I do acknowledge that Stryker has dry powder that it can deploy toward accretive M&A," wrote Stephen Simpson, CFA, in the report. Here are a few key notes about the company:
1. Stryker has produced sales growth over the past two quarters, generating 7 percent and 6 percent organic revenue growth. The company has nearly two years of 5 percent or better organic top-line growth.
2. The MAKO acquisition could finally be improving. There were 13 systems placed in the last quarter and the company added a program for hip implants.
3. The company's MedSurg is seeing good growth. The Medical segment has seen double-digit growth in the past four quarters in a row. Stryker is also a leader in the powered medical tools market.
4. Stryker's efforts in China are going well and they recently partnered with a Turkish manufacturer of hospital beds, improving access in this emerging market.
5. There were rumors over the past year that Stryker was interested in Smith & Nephew, but Mr. Simpson would rather see Stryker acquire a more spine-focused company like NuVasive or Globus Medical, especially as the S&N deal is no longer imminent.
6. There are other companies that could be beneficial acquisitions for Stryker as well, like Novadaq or Entellus, an ENT company.
7. A spine or surgery/surgical equipment company acquisition is an attractive prospect, but there is no guarantee of added value through acquisitions. "I'm content to remain on the sidelines on this one as the valuation doesn't really seem to mark a significant opportunity," wrote Mr. Simpson.