Stryker stock sidestepped a guidance haircut Wednesday as an analyst credited the medtech giant for its strong visibility heading into late 2022.
For the year, Stryker expects current exchange rates to have a 25- to 30-cent impact on its adjusted profit. That's on top of a 40-cent cut to its full-year guidance. The outlook trim comes as the greenback hits a 20-year high against other world currencies.
Evercore ISI analyst Vijay Kumar said Stryker did enough to provide visibility for earnings. The company already pre-purchased electronic components to support the second half of 2022, so he sees no "any incremental surprises" from an inflation standpoint, Kumar said in a report to clients.
"On the capital front, management noted that order trends continued to be strong and Stryker was not seeing any slowdown in its biz," he said.
On today's stock market, Stryker stock climbed 3.6% to close at 211.80.
Stryker Stock: Guidance Trim On Exchange Rates
There was a lot of nervousness heading into Stryker's report, Kumar said. And in fact, Stryker posted sweeping misses. Sales rose 5% to $4.49 billion, but missed analysts' call for $4.53 billion. Adjusted earnings were flat year over year at $2.25 a share and lagged views by 3 cents.
On a strict, as-reported basis, Stryker's medical-surgery and neuro-technology business grew 8%, outperforming a 0.5% gain for the orthopedics and spine segment.
Bullishly, Stryker raised its sales guidance and now expects 8%-9% growth on an organic basis. That's up from its prior outlook for 6%-8% organic sales growth. But the company trimmed its adjusted earnings view to $9.30-$9.50 per share, down 40 cents at the midpoint from its previous guidance.
In comparison, Stryker stock analysts had seen adjusted earnings of $9.60 per share and $18.38 billion in sales. The company noted current exchange rates could have a 2%-3% impact on revenue and hit earnings by 25 to 30 cents per share.
"Negative foreign currency and inflation, including spot buys of materials, pressured our adjusted earnings," Stryker Chief Executive Kevin Lobo said in a written statement. "We are confident in our full-year outlook for revenue; however, we are expecting continued adjusted EPS challenges due to worsening foreign exchange and other macroeconomic conditions."
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