Stryker Announces Guidance; Plenty of Upside Potential

| About: Stryker Corporation (SYK)

Great news from Stryker (NYSE:SYK). The company announced Q4 sales ahead of its earnings report. Sales for the quarter came in at $1.995 billion, which is up 8.8% from a year ago and in line with what Wall Street was expecting. For the year, sales were $7.32 billion, up 8.9% for the year.

Stryker also said to expect full-year earnings (after charges) for 2010 to range between $3.31 to $3.33 per share, slightly above the company's earlier guidance of $3.27 to $3.30 per share. That’s an increase of 12.2% to 12.9% over 2009′s EPS of $2.95.

Here’s what Stryker had to say for 2011:

The financial forecast for 2011 includes a constant currency sales increase of 11-13% as a result of growth in shipments of Orthopaedic Implants and MedSurg Equipment as well as sales from the recently acquired Neurovascular business. If foreign currency exchange rates hold near current levels, the Company anticipates net sales will be favorably impacted by approximately 0% to 1.0% in the first quarter of 2011 and by approximately 0.5% to 1.5% for the full year of 2011. Excluding the expected impact from foreign currency as well as acquisitions (Sonopet Ultrasonic Aspirator, Gaymar Industries, Porex Surgical and the Neurovascular division of Boston Scientific), projected sales growth is 5-7%.

The Company projects that adjusted diluted net earnings per share for 2011 will be in the range of $3.65 to $3.73 (Note: Wall Street had been expecting $3.64 – Eddy), an increase of 10% to 13% over expected adjusted diluted net earnings per share of $3.31 to $3.33 in 2010. In 2011, the Company anticipates acquisition and integration-related charges associated with the recently completed acquisition of the Neurovascular business to reduce reported diluted net earnings per share by approximately $0.21 to $0.25, including transaction costs, additional costs associated with the step-up of inventory to fair value and other integration costs.

“We believe our results for 2010 and our financial forecast for 2011 underscore the strength of our unique sales footprint that is driving superior results in the near term while investing in critical growth areas for the long term,” commented Stephen P. MacMillan, Chairman, President and Chief Executive Officer.

The stock is up 2.4% after-hours. If you’re new to investing, I should point out how good it is to have a company give us guidance for the next 12 months. Not many companies do that. I don’t expect the forecast to be perfect, but I love the fact that we’re not kept in the dark.

Monday’s closing price was $54.70. Let’s take the mid-point of the company's 2011 forecast which is $3.69. That comes to a forward P/E of 14.8 which is a good value, and there’s still plenty of room for upside surprises.

Disclosure: Author holds a position in SYK.

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