Should we cheer or jeer Stryker's Physio-Control acquisition?
Stryker announced plans to acquire Physio-Control for $1.28 billion yesterday, the company's third acquisition in February 2016. While some hail the acquisition as a good move to boost Stryker's emergency medical segment presence, others have doubts. Medtronic previously owned Physio-Control, which Bain Capital bought in 2012 for $487 million, and categorized the company in a "mature, saturated market" according to a Barrons report.
In the report, BMO Capital's Joanne Wuensch outlines her concerns with the acquisition and reasons to rate Stryker as "underperforming" because Stryker's EMS line hasn't traditionally be part of the revenue profile most investors focus on. Additionally, the company plans to fund the most recent acquisitions with $3.5 billion to $4.1 billion debt.
However, Ms. Wuensch said the acquisition could balance Stryker's EMS franchise which includes a disposable revenue stream.
Today, the company's stock opened at $98.09, up over yesterday's close at $97.40. Stryker has a market cap of $36.2 billion with a P/E ratio at 25.66. For 2015, Stryker reported 3.7 percent net sales growth in the fourth quarter, reaching $2.7 billion. In the full year, Stryker reported 2.8 percent net sales growth, reaching $9.9 billion.