Where Will Stryker Stock Be In 1 Year?

Medical technology may be better than ever, but life expectancy in the US is headed in the wrong direction. The average life span of 78.8 years in 2019 decreased to 76.1 years in 2022. The declining trend highlights the continued need for improved medtech to combat diseases and conditions.

As the third largest medical technology company in the world, Stryker Corporation (NYSE: SYK) is a key player in that fight. The company produces everything from top-of-the-line hip replacements to minimally invasive neurosurgery tools, and it doesn’t stop there.

Stryker has integrated artificial intelligence (AI) into its tools aimed at speeding up diagnoses and saving lives.

Because of the company’s potential, SYK has intrigued investors. The stock is up 33% over the past year compared to the S&P 500’s 27.8% gain.

After a brief setback in 2022, Stryker stock has bounced back and surpassed its highs of 2021, and in early 2024 set an all-time mark.

The most recent boost came from news that Stryker was launching a surgical planning system to optimize foot and ankle surgeries. That is the first of many products in the company’s considerable pipeline to come.

Though Stryker beat estimates for revenue and earnings in the final quarter of 2023, some investors are starting to worry that SYK is becoming overvalued after the recent run-up.

So is Stryker stock a buy?

Why Did Stryker Stock Go Up?

There is an increasing demand for Stryker’s line of products. In the 4th quarter of 2023, net sales increased by 11.8% year-over-year to $5.8 billion, beating analysts’ expectations for the quarter by 3.78%.

The 4th quarter continued the upward trajectory. Stryker’s 2023 full-year net sales of $20.5 billion was also around 11% better than 2022. The company managed to improve its margins throughout the year as well, and the 4th quarter adjusted operating income margin of 27.2% was 0.6% higher than last year.

That made a significant impact on the bottom line, as net income of $1.14 billion was over 103% higher year-over-year. Diluted earnings per share were $2.98, a 5.88% improvement when compared to analysts expectations.

Stryker operates across two segments (MedSurg and Neurotechnology, Orthopedic and Spine) and both posted double-digit growth in the 4th quarter.

Overall, the quarter represented a strong showing for Stryker, and its executives forecasted continued revenue growth of 7.5% to 9% for 2024.

Will Stryker Stock Keep Going Up?

A large part of any future gains for the stock will likely be tied to the company’s pipeline, as well as to its success in integrating AI to software and devices.

The company has already made good strides in that respect by incorporating AI into the operations of its Mako robotic arm. Mako is a comprehensive platform to help surgeons who are performing hip and knee replacements.

Generative AI can create better models and even suggest tools and plans for surgeons to review.

Outside of AI, the company announced its 1788 series of surgical cameras in September 2023. These state-of-the-art devices will give medical professionals the clearest images available while still being minimally invasive.

In January, Stryker announced it will launch Prophecy Footprint, part of its Prophecy Surgical Planning system. It’s designed to help surgeons assess the whole foot before surgery. It is also synergistic with the company’s ankle implant, Infinity Total Ankle System, which has been used for over a decade in ankle replacements for late-stage arthritis patients.

Where Will Stryker Be In 1 Year?

According to 25 analysts, Stryker stock can rise to as high as $355 per share within the next year.

With a proven product line and a strong pipeline, it’s not surprising that there isn’t a sell rating on SYK at the moment while 18 analysts rate Stryker as a Buy at this point.

On the high side, the most bullish forecast would result in SYK share price reaching $400 per share over the next year, representing a 13.7% increase.

The remaining ten analysts call the stock a Hold. Though there isn’t currently a recommendation to Sell, the lowest forecast has SYK falling to $339 per share over the next 52 weeks, which would result in a 3.6% drop.

Is Stryker Stock Undervalued?

Given how far Stryker share price has run and how close the share price sits to fair value, it is unlikely to outperform the market, at least according to the consensus of analysts.

The company’s price-to-earnings (P/E) ratio of 42.5x seems to support that conclusion because it’s higher than the 30 P/E average for the technology industry at large. It’s also higher than many fellow medical technology companies, such as Medtronic and Abbott Laboratories.

Stryker does pay a dividend, though, at an annual dividend yield of 0.91%. That amounts to a quarterly payout of $0.80 to SYK holders.

Is Stryker Stock a Buy or Sell?

Stryker is a medical technology company that has proven its value in a very competitive industry. The company beat revenues and earnings expectations for the 4th quarter, and it improved its operating margins. Revenue growth is expected to continue into 2024, and the company has a healthy pipeline of new products.

SYK outperformed the S&P 500 last year but analysts don’t expect that to happen again. While Stryker is incorporating AI, it isn’t to the level where the stock should see a substantial boost from here. The company does pay a modest dividend, but it is starting to hit fair value levels.

Nonetheless, Stryker is still a firmly established company with a major role in a growing industry. That may not be enough to entice investors at this point, but if the company makes more splashy product announcements this year, SYK could certainly continue its trend higher.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.