Stryker Q2 - Hit By Decline in Elective Surgeries

A lot of big tech stocks reported second quarter results last night and all of them were up nicely after hours. Our four largest tech holdings are Apple, Amazon, Google and Facebook and they all blew the barn doors off and will likely trade at new record highs later today.

I would have loved to write about one of them, but when the reporting tasks were being dished out to the Vestact team yesterday, Michael said I had to write about Stryker. What? Not fair!

Relax folks, Stryker is also important, because it is widely held in our customer base. These results were not expected to be good. Stryker makes hip, knee and spinal devices and a wide range of surgical tools, and has been hard hit by the decline in elective surgeries during the Covid-19 outbreak. Who would want to go into a hospital now?

To the numbers. Earnings for the quarter were just 64c per share, versus a (recently lowered) consensus of 55c. Revenue came in at $2.76 billion compared to the $2.59 billion expected. Here was the overview comment from CEO Kevin Lobo:

"Our second quarter results were negatively impacted by Covid-19, but I am pleased with the resiliency and creativity that our team displayed in supporting our customers and continuing to advance our new product pipelines. We were encouraged to see increased sales momentum through the quarter and into July and are poised to capitalize on the broader resumption of deferrable surgeries."

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I would agree with Lobo, and as a relentless optimist I would expect Covid-19 hospitalisations around the world to tail off soon. By September, the coast will be much clearer and confidence will return. If you can't walk anymore and need a new knee, that problem won't have gone away. It's time to call your orthopaedic surgeon and make an appointment.