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Valens Research

SYK - Embedded Expectations Analysis - 2019 07 18

Stryker Corporation (SYK:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 29.9x Uniform P/E. At these levels, markets are pricing fairly bullish expectations for the firm, but management appears concerned about slow market conditions, their new products, and their growth opportunities.

Specifically, management may lack confidence in their ability to reinvigorate growth from last year's depressed levels, and they appear concerned about sustained slow market conditions. Furthermore, they appear concerned about declining sales of their 1588 camera as it reaches the end of its lifecycle, and they may be concerned about the sustainability of 1688 sales growth. Finally, they may be exaggerating the market opportunity they see in China and Japan, and they appear concerned about the sustainability of recent revenue growth in MedSurg.
Underlying
STRYKER CORPORATION

Stryker is a medical technology company. The company provides products and services in orthopaedics, medical and surgical, and neurotechnology and spine. The company's Orthopaedics products consist of implants used in hip and knee joint replacements and trauma and extremities surgeries. The company's MedSurg products include surgical equipment and navigation systems, endoscopic and communications systems, patient handling, emergency medical equipment and intensive care disposable products, reprocessed and remanufactured medical devices and other medical device products used in a range of medical specialties. The company's Neurotechnology and Spine products include neurosurgical, neurovascular, and spinal implant devices.

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