Core Insights - Stryker reported revenue of $7.17 billion for the quarter ended December 2025, reflecting an 11.4% increase year-over-year and surpassing the Zacks Consensus Estimate of $7.13 billion by 0.61% [1] - The company's EPS was $4.47, up from $4.01 in the same quarter last year, exceeding the consensus estimate of $4.40 by 1.71% [1] Financial Performance - International net sales reached $1.73 billion, slightly above the average estimate of $1.72 billion, marking a year-over-year increase of 10.7% [4] - U.S. net sales were reported at $5.44 billion, matching the average estimate and showing an 11.7% increase year-over-year [4] - MedSurg and Neurotechnology sales totaled $4.56 billion, exceeding the estimated $4.53 billion, with a significant year-over-year growth of 17.5% [4] Segment Analysis - Orthopaedics sales amounted to $2.61 billion, aligning with estimates and reflecting a 2.2% year-over-year increase [4] - Within Orthopaedics, hips sales were $499 million, slightly below the estimated $504.79 million, but still showing a 7.8% increase year-over-year [4] - Trauma and Extremities sales were $1.09 billion, below the estimated $1.1 billion, with a year-over-year growth of 9% [4] Key Metrics - Stryker's stock has returned 1.8% over the past month, outperforming the Zacks S&P 500 composite's 0.8% change [3] - The company holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Group 1 - The core viewpoint is that Stryker, a medical equipment maker, has raised its full-year profit forecast due to strong sales of its implants and other medical devices [1] Group 2 - The company is experiencing robust demand for its products, which is contributing to the positive outlook for the year [1] - The increase in profit forecast indicates confidence in the company's growth trajectory within the medical device industry [1]

Financial Data and Key Metrics Changes - For Q4 2025, organic sales growth was 11%, and for the full year, it was 10.3%, surpassing $25 billion in sales [4][12] - Full-year U.S. organic sales growth was 11.2%, while international organic sales growth was 7.5% [4] - Adjusted earnings per share for Q4 was $4.47, up 11.5% year-over-year, and for the full year, it was $13.63, up 11.8% from 2024 [14] Business Line Data and Key Metrics Changes - MedSurg and Neurotechnology achieved organic sales growth of 12.6% in Q4, with U.S. growth of 13% and international growth of 10.9% [15] - Instruments had U.S. organic sales growth of 19.1%, driven by strong demand in power tools and surgical technologies [15] - Endoscopy saw U.S. organic sales growth of 11.1%, led by sustainability and sports medicine businesses [15] - Vascular had U.S. organic sales growth of 4.3%, with strong performance in the hemorrhagic business offset by competitive pressures in the ischemic sector [16] Market Data and Key Metrics Changes - International results were bolstered by strong performances in emerging markets, particularly South Korea and Japan [6] - The U.S. capital-related businesses performed robustly, contributing to double-digit organic sales growth [9] - Hospital CapEx budgets remain healthy, and the capital order book is elevated as the company enters 2026 [9] Company Strategy and Development Direction - The company is focused on operational excellence, active M&A, and systematic specialization by creating new business units [7] - The new SmartCare business unit combines Vocera and CareAI, enhancing the company's product offerings [7] - The company expects to continue delivering growth at the high end of the medtech sector, with a strong financial position to support M&A activities in 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of procedural volumes and market conditions for 2026, driven by robotic-assisted surgery and favorable demographics [9] - The company anticipates organic net sales growth of 8%-9.5% for 2026, with adjusted net earnings per share expected to be between $14.90 and $15.10 [21][22] - Management noted that tariff impacts are expected to be approximately $400 million for the year, with an incremental $200 million compared to 2025 [22] Other Important Information - The company reported a year-to-date cash flow from operations of $5 billion, an increase of $802 million from 2024 [21] - Adjusted gross margin for Q4 was 65.2%, and adjusted operating margin was 30.2% of sales, reflecting ongoing operational improvements [19] Q&A Session Summary Question: Confidence in 2026 organic growth guidance - Management expressed confidence due to a strong order book and robust Mako performance, suggesting a modestly more positive outlook compared to the previous year [25][26] Question: Impact of leadership changes - The elevation of Spencer Stiles to president and COO is seen as a strategic move to enhance leadership and operational focus, allowing the CEO to concentrate on broader strategic initiatives [29] Question: Pricing expectations for capital and implant businesses - Management expects pricing to remain stable in 2026, building on previous gains [32] Question: Performance of specific business lines - Strong performance in Endoscopy and Instruments was noted, while Trauma and Extremities faced tough comparisons from the previous year [35][36] Question: Competitive landscape changes - Management indicated no change in strategy despite recent acquisitions in the industry, expressing confidence in their market position [41] Question: Patient volume concerns - Management reported robust volumes as they entered 2026, with expectations of mid-single-digit growth in ortho markets [43] Question: Recurring revenue model - Approximately 75% of revenue is procedurally driven, with a significant portion tied to recurring and disposables [82]

Financial Data and Key Metrics Changes - For Q4 2025, organic sales growth was 11%, and for the full year, it was 10.3%, surpassing $25 billion in sales [4][12] - Full-year U.S. organic sales growth was 11.2%, while international organic sales growth was 7.5% [4] - Adjusted earnings per share for Q4 was $4.47, up 11.5% year-over-year, and for the full year, it was $13.63, up 11.8% [14][12] - Adjusted gross margin was 65.2%, and adjusted operating margin was 30.2%, reflecting operational improvements [19][12] Business Line Data and Key Metrics Changes - MedSurg and Neurotechnology had organic sales growth of 12.6%, with U.S. growth of 13% and international growth of 10.9% [15] - Instruments achieved U.S. organic sales growth of 19.1%, driven by strong demand in power tools and surgical technologies [15] - Endoscopy had U.S. organic sales growth of 11.1%, led by strong performances in Sustainability and Sports Medicine [15] - Vascular reported U.S. organic sales growth of 4.3%, with strong performance in the hemorrhagic business offset by competitive pressures in the ischemic sector [16] Market Data and Key Metrics Changes - International results were bolstered by strong performances in emerging markets, particularly South Korea and Japan [6] - The U.S. capital-related businesses showed robust performance, contributing to double-digit organic sales growth [9] - Hospital CapEx budgets remain healthy, and the capital order book is elevated as the company enters 2026 [9] Company Strategy and Development Direction - The company is focused on maintaining high growth through exceptional talent, active M&A, and systematic specialization [7] - The introduction of new business units, such as SmartCare, and splitting sales forces has contributed to growth [7] - The company expects to continue delivering growth at the high end of MedTech, with a strong financial position to support M&A activities in 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of procedural volumes and market conditions for 2026, driven by robotic-assisted surgery and favorable demographics [9] - The company anticipates organic net sales growth for 2026 to be in the range of 8%-9.5% and adjusted net earnings per share between $14.90-$15.10 [21][22] - Management remains optimistic about the potential for continued growth despite tariff impacts and competitive pressures [22] Other Important Information - The company expects full-year tariff impacts to be approximately $400 million in 2026, with an incremental $200 million compared to 2025 [22] - Cash from operations for the year was $5 billion, an increase of $802 million from 2024, indicating strong cash flow performance [21] Q&A Session Summary Question: Confidence in 2026 organic growth guidance - Management expressed confidence due to a strong order book and robust Mako performance, suggesting a potential for 10% growth depending on macro conditions [25][26] Question: Impact of leadership changes - The elevation of Spencer Stiles to president and COO is seen as a strategic move to enhance leadership and operational focus, allowing the CEO to concentrate on broader strategic initiatives [29] Question: Pricing expectations for capital and implant businesses - Management expects pricing to remain stable in 2026, with a focus on maintaining price gains achieved in previous years [32] Question: Performance of Trauma and Extremities and Vascular businesses - Management acknowledged strong prior year comparisons affecting Trauma and Extremities, while the Vascular business faced challenges in the ischemic sector but remains strong in hemorrhagic [36][38] Question: Competitive landscape changes - Management indicated no change in strategy despite competitors' moves, expressing confidence in their market position and capabilities [41] Question: Patient volume concerns related to healthcare policy changes - Management noted robust volumes as they entered 2026, with expectations for continued growth in orthopedic markets [43] Question: Recurring revenue model - Approximately 75% of revenue is procedurally driven, with a significant portion tied to recurring and disposables [82]

Financial Data and Key Metrics Changes - For Q4 2025, organic sales growth was 11%, and for the full year, it was 10.3%, surpassing $25 billion in sales [3][11] - Adjusted earnings per share for Q4 was $4.47, up 11.5% year-over-year, while full-year adjusted earnings per share was $13.63, up 11.8% from 2024 [12][19] - Adjusted operating margin was 30.2% for Q4, an increase of 100 basis points compared to Q4 2024 [18] Business Line Data and Key Metrics Changes - MedSurg and Neurotechnology achieved organic sales growth of 12.6% in Q4, with U.S. growth at 13% and international growth at 10.9% [13] - Instruments had U.S. organic sales growth of 19.1%, driven by strong demand in power tools and surgical technologies [13] - Vascular experienced U.S. organic sales growth of 4.3%, with strong performance in the hemorrhagic business offset by competitive pressures in the ischemic sector [14] Market Data and Key Metrics Changes - U.S. organic sales growth was 11.2%, while international organic sales growth was 7.5%, with strong performances in emerging markets like South Korea and Japan [3][4] - The capital environment remains healthy, with robust hospital CapEx budgets and an elevated capital order book entering 2026 [7][30] Company Strategy and Development Direction - The company is focused on maintaining high growth through exceptional talent, active M&A, and systematic specialization by creating new business units [5] - The new SmartCare business unit combines Vocera and CareAI, reflecting the company's strategy to innovate and expand its product offerings [5] - The company expects to continue delivering growth at the high end of medtech, with guidance for 2026 organic net sales growth in the range of 8%-9.5% [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of procedural volumes and the capital environment for 2026, driven by the adoption of robotic-assisted surgery and favorable demographics [7][30] - The company anticipates a slight positive impact from pricing and foreign exchange rates in 2026, with expected tariff impacts of approximately $400 million [20] Other Important Information - Cash from operations for the year was $5 billion, an increase of $802 million from 2024, resulting in free cash flow as a percentage of adjusted net earnings of 81% [19] - The company is set to launch several new products in 2026, including the Mako RPS handheld robot and the Incompass Total Ankle [58][60] Q&A Session Summary Question: Confidence in 2026 organic growth guidance - Management indicated that the strong order book and Mako performance give them confidence to start 2026 with a higher growth range than the previous year, with 10% growth still possible depending on macro conditions [22][23] Question: Impact of leadership changes - The elevation of Spencer Stiles to president and COO is seen as a strategic move to enhance leadership and operational focus, allowing the CEO to concentrate on broader strategic initiatives [25][26] Question: Pricing expectations for 2026 - Management expects pricing to remain stable in 2026, building on previous gains, with a favorable capital environment supporting this outlook [28][30] Question: Performance of specific business lines - Management acknowledged strong performances in Endoscopy and Instruments, while noting challenges in Trauma and Extremities due to tough comparisons from the previous year [32][34] Question: Competitive landscape changes - Management stated that their strategy remains unchanged despite competitors' moves, emphasizing confidence in their market position and product offerings [38][39] Question: Patient volume concerns - Management reported robust patient volumes as they enter 2026, with expectations for mid-single-digit growth in ortho markets [41] Question: Recurring revenue model - Approximately 75% of revenue is procedurally driven, with a significant portion tied to recurring and disposable products [86] Question: Future innovation and product launches - Management highlighted ongoing innovation, including the Mako RPS and other new products, as key drivers for future growth [58][60]

Financial Performance - Fourth quarter net sales increased by 11.4% to $7.2 billion, with organic net sales growth of 11.0%[3] - Full year net sales reached $25.1 billion, reflecting an 11.2% increase, with organic net sales growth of 10.3%[8] - Reported net earnings for the fourth quarter were $0.8 billion, a 55.5% increase, and $3.2 billion for the full year, an 8.5% increase[6] - Adjusted net earnings per diluted share for the fourth quarter increased by 11.5% to $4.47, and for the full year increased by 11.8% to $13.63[7] - The company surpassed $25 billion in revenue, entering 2026 with significant momentum[2] Segment Performance - MedSurg and Neurotechnology segment reported net sales of $4.6 billion for the fourth quarter, up 17.5%, and $15.6 billion for the full year, up 15.7%[4] - Orthopaedics segment net sales were $2.6 billion for the fourth quarter, a 2.2% increase, and $9.5 billion for the full year, a 4.3% increase[5] - The MedSurg and Neurotechnology segment saw a sales growth of 15.7% in 2025, totaling $15.647 billion compared to $13.518 billion in 2024[24] - The Orthopaedics segment reported a sales increase of 4.3% in 2025, totaling $9.469 billion compared to $9.077 billion in 2024[24] Earnings and Margins - Adjusted operating income margin for the fourth quarter increased by 100 basis points to 30.2%[7] - Reported gross profit margin for the fourth quarter was 64.5%[6] - Gross profit margin for Q4 2025 was 64.5%, slightly up from 64.9% in Q4 2024[32] - Total revenue for 2025 was $16,065 million, representing a 64.0% gross profit margin, compared to $14,440 million and 63.9% in 2024[36] Cash Flow and Assets - Net cash provided by operating activities rose to $5.044 billion in 2025, compared to $4.242 billion in 2024, marking a 19% increase[22] - Total assets increased to $47.844 billion in 2025, up from $42.971 billion in 2024, representing a growth of 11.5%[20] - Cash and cash equivalents grew to $4.011 billion in 2025, up from $3.652 billion in 2024, an increase of 9.8%[20] Debt and Liabilities - Long-term debt increased to $14.859 billion in 2025 from $12.188 billion in 2024, reflecting a rise of 21.9%[20] - The company’s total current liabilities rose to $7.794 billion in 2025, compared to $7.616 billion in 2024, an increase of 2.3%[20] Future Outlook - The company expects 2026 organic net sales growth to be in the range of 8.0% to 9.5% and adjusted net earnings per diluted share to be between $14.90 and $15.10[9] - The company anticipates continued growth in revenue and earnings driven by new product launches and market expansion strategies[32] Costs and Adjustments - Acquisition and integration-related costs for 2025 totaled $335 million, significantly higher than $108 million in 2024, driven by employee retention and workforce reductions[38] - Goodwill and other impairments in 2025 amounted to $170 million, a decrease from $977 million in 2024, indicating improved asset management[38] - The effective tax rate for adjusted earnings in 2025 was 15.1%, compared to 14.8% in 2024, indicating a slight increase in tax efficiency[36]

Core Insights - Stryker reported strong financial results for Q4 and the full year of 2025, achieving double-digit sales growth and adjusted earnings per share growth, with a notable operating margin expansion for the second consecutive year [2][6][12]. Q4 Results - Consolidated net sales for Q4 reached $7.2 billion, reflecting an 11.4% increase, with organic net sales growing by 11.0% [3][12]. - MedSurg and Neurotechnology segment net sales were $4.6 billion, up 17.5%, while Orthopaedics segment net sales increased by 2.2% to $2.6 billion [4][5]. - Adjusted net earnings for Q4 were $1.7 billion, marking an 11.6% increase, with adjusted earnings per diluted share rising to $4.47, a 11.5% increase [6][12]. Full Year Results - Total net sales for 2025 were $25.1 billion, an 11.2% increase from the previous year, with organic net sales growing by 10.3% [3][12]. - MedSurg and Neurotechnology segment net sales for the full year were $15.6 billion, up 15.7%, while Orthopaedics segment net sales increased by 4.3% to $9.5 billion [4][5]. - Reported net earnings for the full year were $3.2 billion, an 8.5% increase, with earnings per diluted share at $8.40, up 8.2% [6][12]. Earnings Analysis - Reported gross profit margin for Q4 was 64.5%, while the full year margin was 64.0% [6][12]. - Adjusted operating income margin increased by 100 basis points to 30.2% for Q4 and 26.3% for the full year [6][12]. - The company experienced a significant increase in operating income, with Q4 operating income at $1.8 billion, a 210.5% increase [6][12]. 2026 Outlook - Stryker anticipates organic net sales growth for 2026 to be in the range of 8.0% to 9.5%, with adjusted net earnings per diluted share expected to be between $14.90 and $15.10 [7]. - The company expects a modestly favorable pricing impact and a slight positive effect from foreign exchange rates on sales and earnings [7]. Sales Growth Analysis - The U.S. market contributed significantly to sales, with Q4 sales of $5.4 billion, an 11.7% increase, and full year sales of $19.0 billion, a 12.2% increase [24]. - International sales for Q4 were $1.7 billion, up 10.6%, and full year international sales reached $6.1 billion, an 8.1% increase [24]. Segment Performance - In the MedSurg and Neurotechnology segment, instruments sales increased by 17.1% in Q4, while vascular sales surged by 58.1% [26]. - Orthopaedics segment saw knee sales grow by 8.9% and hip sales by 8.1% in Q4 [26]. Financial Position - As of December 31, 2025, total assets were $47.8 billion, up from $43.0 billion in 2024, with cash and cash equivalents at $4.0 billion [19][20]. - Total liabilities increased to $25.4 billion, with long-term debt at $14.9 billion [20]. Cash Flow Analysis - Net cash provided by operating activities for 2025 was $5.0 billion, compared to $4.2 billion in 2024 [22]. - The company invested $4.9 billion in acquisitions, net of cash acquired, indicating a strong focus on growth through strategic investments [22].

Core Insights - Stryker Corporation (SYK) is set to announce its fourth-quarter 2025 results on January 29, with a previous earnings surprise of 1.59% [1] Q4 Estimates - The Zacks Consensus Estimate for earnings is $4.39 per share, reflecting a year-over-year increase of 9.5% [2] - Revenue consensus is projected at $7.13 billion, indicating a growth of 10.8% compared to the previous year [2] - Model estimates for total sales and adjusted earnings per share are $7.11 billion and $4.35, respectively [2] Factors to Note - Stryker is anticipated to report strong performance in Q4, driven by sustained procedural strength, robust capital demand, and successful product launches, despite tariff-related cost pressures [3] - Top-line growth is expected to stem from broad-based demand across Orthopedics, MedSurg, and Neurotechnology, along with improved execution at the Inari business [3][4] Revenue Growth Drivers - Organic revenue growth is likely supported by stable and resilient procedure volumes across various geographies [4] - Strong hospital balance sheets are facilitating capital spending, with Stryker exiting Q3 with a high backlog and strong order books [4] Margin and Cost Dynamics - Margin expansion efforts are expected to yield positive results through favorable product mix, manufacturing efficiencies, and disciplined SG&A [6] - However, tariff pressures and increased interest expenses from recent debt issuance may limit incremental margin growth [6][7] Segment Performance - Orthopedics is projected to be a key growth driver, with knee and hip businesses likely achieving high-single-digit organic growth due to robotic-assisted surgery adoption and Mako installations [8] - The "Other Ortho" category is expected to remain a significant contributor, supported by a robust capital environment [10] - MedSurg and Neurotechnology segments are likely to maintain strong momentum, benefiting from broad-based growth and specific product demand [11][13] Earnings Prediction Model - The current model does not predict an earnings beat for Stryker, as the Earnings ESP is -0.24% and the company holds a Zacks Rank of 3 [14][15]

Upgrades - CoStar Group (CSGP) upgraded to Buy from Neutral with an $80 price target due to low expectations, past peak investment, and momentum from Homes.com, along with an anticipated AI-driven product update [2] - Teleflex (TFX) upgraded to Buy from Hold with a $138 price target as the company plans to sell its acute care, interventional urology, and manufacturing businesses for $2 billion, expecting significant earnings accretion from share repurchases and debt repayment by 2027 [3] - CoreWeave (CRWV) upgraded to Buy from Hold with a $140 price target, with a solid medium-term outlook ahead of the Q4 report [3] - Affirm (AFRM) upgraded to Buy from Hold with a $100 price target after submitting an application to establish Affirm Bank, which could be a game-changer [4] - Target (TGT) upgraded to Peer Perform from Underperform without a price target, with a wide margin of safety despite reduced estimates due to the company's owned real estate [4] Downgrades - Procter & Gamble (PG) downgraded to Hold from Buy with a price target of $156, up from $150, as the pace of recovery is expected to drag [5] - Stryker (SYK) downgraded to Hold from Buy with a $387 price target following a transfer in analyst coverage, with a well-understood valuation reflecting a "beat/raise precedent" [5] - Insulet (PODD) downgraded to Hold from Buy with a $294 price target after a transfer in analyst coverage, noting that competitive advantages may narrow [5] - Matador (MTDR) downgraded to Equal Weight from Overweight with a price target of $47, down from $61, due to stock valuation incorporating structural considerations and recent productivity variability [5] - SkyWater Technology (SKYT) downgraded to Hold from Buy with a price target of $35, up from $24, after agreeing to be acquired by IonQ for $35 per share or $1.88 billion [5]

Core Viewpoint - The Zacks Style Scores provide a framework for investors to evaluate stocks based on value, growth, and momentum, enhancing the decision-making process for stock selection [2][3][7]. Summary by Category Zacks Style Scores - The Zacks Style Scores rate stocks using a grading system from A to F, with A being the highest score indicating a better chance of outperforming the market [3]. - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6]. Value Score - The Value Score helps investors identify undervalued stocks by analyzing financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3]. Growth Score - The Growth Score emphasizes a company's financial health and future growth potential, considering projected and historical earnings, sales, and cash flow [4]. Momentum Score - The Momentum Score assists investors in capitalizing on stock price trends, utilizing metrics like one-week price changes and monthly earnings estimate changes [5]. VGM Score - The VGM Score combines the three Style Scores to identify stocks with attractive value, strong growth forecasts, and promising momentum, serving as a useful indicator alongside the Zacks Rank [6]. Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.83% since 1988, significantly outperforming the S&P 500 [7][8]. Stock Example: Stryker (SYK) - Stryker is a leading medical technology company, generating approximately 60% of its sales from MedSurg & Neurotechnology and 40% from Orthopaedics, with about 75% of revenue coming from the U.S. market [12]. - Stryker holds a 3 (Hold) rating on the Zacks Rank and has a VGM Score of B, with a Momentum Style Score of B, indicating potential for investors [13][14].