Will SYK's Q2 Earnings Reflect Strong Growth Despite Tariff Overhang?

Core Viewpoint - Stryker Corporation is expected to report strong second-quarter 2025 results, with earnings and revenue growth driven by robust product demand and new launches [1][9]. Q2 Estimates - The Zacks Consensus Estimate for earnings is $3.06 per share, reflecting an 8.9% year-over-year increase [2]. - Revenue is projected at $5.96 billion, indicating a 9.9% growth compared to the previous year [2]. Factors to Note - Stryker achieved 10.1% organic revenue growth in Q1 2025, supported by procedural momentum and successful new product launches [3]. - Full-year organic growth is anticipated to be between 8.5% and 9.5%, with Q2 performance expected to remain strong due to consistent capital demand and new product adoption [3]. Segment Performance - The Mako robotic-assisted surgery segment is expected to continue its momentum, particularly in hips and knees, with record installations noted in Q1 [4]. - Orthopaedics, especially hips and knees, are projected to maintain high-single-digit growth, while trauma and extremities are benefiting from strong demand for the Pangea plating system [4]. - The MedSurg and Neurotechnology segments are anticipated to sustain double-digit growth, driven by strong capital orders and demand for specific devices [5]. New Product Impact - Recent product launches, including Mako 4 and LIFEPAK 35, are likely to have significantly contributed to revenue momentum [6]. - Other new products, such as Artix, AlphaVent Knotless, and Oculan, are building sales pipelines with potential for growth in the latter half of 2025 [6]. Cost and Margin Insights - In Q1, Stryker's gross margin expanded by 190 basis points to 65.5%, and operating margin increased by 100 basis points to 22.9% [7]. - The company anticipates cost pressures in H2 2025 due to new tariffs on imported components, estimating a $200 million annual impact [7]. Earnings Outlook - Adjusted EPS is expected to remain strong in Q2, although growth may moderate slightly due to higher interest expenses and early tariff impacts [8]. - Full-year 2025 EPS is projected to be in the range of $13.20 to $13.45 [8]. Revenue Breakdown - Estimated sales for the MedSurg and Neurotechnology segments are $3.75 billion, while Orthopaedics & Spine segments are pegged at $2.57 billion [10]. - U.S. sales are estimated at $4.74 billion, with international sales at $1.59 billion [10].