Stryker Corp (NYSE:SYK)

CAPS Rating: 5 out of 5

A medical technology company in orthopaedics products. Its products include implants, trauma, craniomaxillofacial and spinal surgeries; biologics; surgical, neurologic, ear, nose & throat and interventional pain equipment; endoscopic, surgical navigation.

Recs

4
Player Avatar SophicFool (< 20) Submitted: 5/21/2009 10:43:41 AM : Underperform Start Price: $38.12 SYK Score: -2.08

With rising unemployment and subsequent loss of health insurance, people are putting off elective hip and knee surgery which adversely affects Stryker.

Also, chief executive Stephen MacMillan recently backed off from giving any long term sales and earnings growth targets. This, to me, indicates that the returns will be less than stellar for 2009.

Finally, the company received their fourth FDA 'warning letter' within a two year period.

All of these add up and will push the stock down in the near term.

Having knocked this stock down, I am bullish on this stock in the future. I just feel that the market is going to beat this stock up a bit until we see some positive signs. Currently Stryker is spending $200 million to improve its quality and compliance systems. Should this money be well spent and help to resolve the concerns from the FDA it would be money well spent.

Also, once the economy recovers those people who put off elective hip and knee surgery at this time will be looking to have that procedure done, plus any new patients who may require the surgery will add a nice surge of product purchasing at the end of 09 into 2010.

I do not own this stock, but am monitoring it and looking at less than $30 for my entry point.

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Member Avatar herbs814 (< 20) Submitted: 8/4/2009 2:14:09 PM
Recs: 0

Any recovery is going to be delayed, slow, and weak. Those putting off elective surgery are more likely (and would be smarter) to get it done overseas.

The more deflation (delinquency and bankruptcy and putting off purchases) we experience, the more it strengthens the dollar relative to other foreign currencies.. and the more it makes the case for medical tourism. You should be betting on foreign medical device manufacturers, like Seimens AG, not American companies.

Member Avatar herbs814 (< 20) Submitted: 8/4/2009 2:18:40 PM
Recs: 0

Especially when the Democrats are proposing socialized medicine (coercive ration of elective procedures) it would be foolish to bet on American device manufacturers. Foreign companies that already are experiencing the tyranny of government rationing already have that baked into the price.

I picked SYK to outperform because of their low debt and good cash reserves. But a good cash position means little if the government is going to destroy SYK's business model with the stroke of a pen.

Member Avatar commercenary (65.26) Submitted: 8/11/2009 11:42:06 PM
Recs: 0

Before making the above arguments, consider:

- What is the incidence of elective vs. non-elective hip surgeries? I am not convinced elective hip surgeries outnumber non-elective ones. Falls and osteoporosis are increasing in an aging population, leading, unfortunately, to more hip fractures requiring urgent/emergent surgical repair.

- Another set of non-elective surgeries with which Stryker is involved is spine surgeries, such as those for compression fractures - also increasing in an aging, osteoporotic population.

Further, there are more types of elective joint surgeries - viz., hip resurfacing - being recommended more often for folks at ever increasing ages.

Finally, and politically:

- I'm not sure any new health plan will wind up rationing elective procedures for the majority of the population any more than the current private-only insurance system does. Far too many tests and treatments require prior authorization through private insurance companies.

- I bet treatments under mandated "no pre-existing condition" rules will lead to far more business than any "rationing" might take away. Consider the person with osteoarthritis now able to get coverage for elective joint replacement, despite having osteoarthritis for decades prior.

- Further, more people covered by insurance nation-wide will likely lead to more, not fewer, elective procedures overall. And it seems this could only mean more compensation for companies relying on payment for their services. (Not as many write-offs for the uninsured, etc., etc.)

Member Avatar wilve (< 20) Submitted: 11/6/2010 6:45:28 AM
Recs: 0

Interesting comment, but only covering the US market.
Owing to the decreasing value of the dollar probably STRYKKER will be able to develop its foreign markets.
What is the extend of their foreing activity; Answer could be inrersting

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