Stryker Q1 - Elective Surgery Down

Last week Stryker reported Q1 earnings. As a medical device business, this company stands to be hard hit by COVID-19. Most of their equipment relies on elective surgeries like hip and knee replacements. The share price is down 20% from its February highs so the market has factored in a lot of this already.

Of course, these results only reflect a few weeks of our new normal. Sales had increased 2% and earnings per share declined 2.1%. Both beating expectations. They did unfortunately pull all guidance estimates, showing that the company has no idea how sales will perform for the rest of the year. Let's be honest, who does?

Analysts estimate that sales were growing at 8% pre lockdown, then dropped 25% in mid-March and dropping further in April by between 35%-45%. It is tough going for sure. They do manufacture hospital beds and protective equipment so some divisions will receive higher demand.



The company, who is very acquisitive, has $4bn in cash. Maybe they will see some good buying opportunities?

If you were in line for a life improving hip replacement, you will still go get it after lockdown. Surgeons mostly get paid per procedure. They too will be working overtime after lockdown to catch up on lost income. We expect a fast recovery for Stryker once things normalise. This stock should be bought on weakness.