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Fundamental View
AS OF 05 Jun 2025Stryker benefits from a leading position in orthopedics as well as strong franchises in medical surgery and neurotechnology. The company’s sales and EBITDA growth trajectory bests most of its medical device peers.
Stryker has exhibited discipline with capital allocation. Following larger bolt-on deals in 2022 (Vocera, $3.1 bn) and 2020 (Wright Medical, $5.4 bn) management prioritized debt reduction.
We expect SYK to manage leverage in the low- to mid-2x range as it addresses its M&A needs/wants in the aftermath of the Inari purchase.
Business Description
AS OF 05 Jun 2025- Stryker (SYK) is a global manufacturer of implants used in joint replacement & trauma surgeries; surgical equipment & surgical navigation systems; endoscopic & communications systems; patient handling & emergency medical equipment; neurosurgical, neurovascular & spinal devices among other products. Stryker generated $22.6 bn of revenues in 2024 (versus $20.5 bn in 2023).
- SYK maintains two operating segments: MedSurg & Neurotechnology (60% of 2024 consolidated revenues) and Orthopaedics & Spine (40%).
- SYK's recent sizable acquisitions include: Inari Medical ($4.9 bn) in 2025, which increased its exposure to peripheral vascular diseases; Vocera ($3.1 bn enterprise value) in 2022, which increased its digital care coordination and communication categories; Wright Medical ($5.6 bn including debt) in 2020, which increased its exposure to the trauma & extremities end market; and K2M Group ($1.4 bn) in 2018, which boosted the spine portfolio.
Risk & Catalysts
AS OF 05 Jun 2025Stryker is exposed to medical procedure volumes. While volumes have been positive, owing in part to the resumption of procedures deferred during COVID, volatility could result from economic uncertainty in the year ahead.
Stryker’s M&A interest has leaned bolt-on in nature over the past several years, including the acquisitions of Inari in 2025 ($4.9 bn), Vocera in 2022 ($3.1 bn) and Wright Medical in late 2020 ($5.4 bn).
Stryker has moderate overall exposure to hospital capital budgets versus medical device peers as it has recurring sales of consumables and parts.
Last quarter SYK announced a definitive agreement to sell its US Spinal Implants business to Viscogliosi Brothers to create a newly formed company (to be named VB Spine, LLC).
Key Metric
AS OF 05 Jun 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 1Q25 |
|---|---|---|---|---|---|
| Revenue | 17,108 | 18,449 | 20,498 | 22,595 | 23,218 |
| Gross Profit | 10,968 | 11,578 | 13,058 | 14,440 | 14,851 |
| R&D | (1,235) | (1,454) | (1,388) | (1,466) | (1,503) |
| SG&A | (6,427) | (6,455) | (7,121) | (7,703) | (8,166) |
| Adj. EBITDA | 4,753 | 4,755 | 5,356 | 6,179 | 6,384 |
| Total Debt | 12,479 | 13,048 | 12,995 | 13,597 | 16,781 |
| Gross Leverage | 2.6x | 2.7x | 2.4x | 2.2x | 2.6x |
| Interest Coverage | 14.1x | 14.1x | 15.0x | 15.6x | 16.1x |
CreditSight View Comment
AS OF 19 May 2025We maintain our Outperform recommendation on Stryker. SYK exhibits solid organic growth prospects on the strength of its orthopedics business and its capital equipment backlog. While M&A activity is likely to increase through the remainder of the year, we expect management’s focus to lean bolt-on. We prefer SYK to similarly-rated peer, BSX, a name with similar leverage and (perhaps) a richer M&A appetite.
Recommendation Reviewed: May 19, 2025
Recommendation Changed: May 03, 2022
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