Medtronic vs Stryker
Executive Summary
The New Year started off well in the US medical devices industry and shows no signs of slowing down in 2008. The robust demand for medical equipment and the increasingly ageing population helped the shares of several medical devices makers outperform the market in the second half of 2007. We maintain the belief that, as a whole, the medical device industry is highly profitable with high barriers to entry. In addition, during periods of economic uncertainty, medical equipment has seen continued gains.
We are evaluating two companies within the Medical Equipment Industry: Stryker Corp. (NYSE:SYK) and Medtronic Inc. (NYSE:MDT). Our main goal is to analyze which company might make a better investment.
Stryker Corp (NYSE: SYK)
We are recommending a buy at a price target of: $78.90
Market data as of: 07/18/2007
STOCK PRICE: $64.52
ANNUAL DIVIDEND: $0.33
MARKET CAP: $26.58B
PRICE TO EARININGS: $25.34
(TRAILING 12MOS)
PRICE TO EARNINGS: $25.69
(FORWARD 12MOS)
FULL YEAR ENDED 12/31/
2004 2005 2006 2007
Total Net Sales $4,262,300 $4,608,900 $5,147,200 $6,000,500
Sales Growth 17.57% 8.13% 11.68% 16.58%
Operating Income $720,400 $998,800 $1,074,300 $1,307,300
Operating Margin 16.90% 21.67% 20.87% 21.79%
Net Income $465,700 $675,200 $777,700 $1,017,400
Net Margin 10.93% 14.65% 15.11% 16.96%
Earnings Growth 2.69% 44.99% 15.18% 30.82%
Medtronic, inc. (NYSE: MDT)
We are recommending a buy at a price target of: $ 56.50
Market data as of: 07/18/2007
STOCK PRICE: $53.43
ANNUAL DIVIDEND: $0.19
MARKET CAP: $60.12B
PRICE TO EARININGS: $27.37
(TRAILING 12MOS)
PRICE TO EARNINGS: $19.73
(FORWARD 12MOS)
FULL YEAR ENDED 04/25/
2004 2005 2006 2007
Total Net Sales $10,054,600 $11,292,000 $12,299,000 $13,515,000
Sales Growth 10.65% 12.31% 8.92% 9.89%
Operating Income $2,788,900 $3,240,600 $3,698,989 $3,212,000
Operating Margin 27.74% 28.70% 30.08% 23.77%
Net Income $1,803,900 $2,546,700
The New Year started off well in the US medical devices industry and shows no signs of slowing down in 2008. The robust demand for medical equipment and the increasingly ageing population helped the shares of several medical devices makers outperform the market in the second half of 2007. We maintain the belief that, as a whole, the medical device industry is highly profitable with high barriers to entry. In addition, during periods of economic uncertainty, medical equipment has seen continued gains.
We are evaluating two companies within the Medical Equipment Industry: Stryker Corp. (NYSE:SYK) and Medtronic Inc. (NYSE:MDT). Our main goal is to analyze which company might make a better investment.
Stryker Corp (NYSE: SYK)
We are recommending a buy at a price target of: $78.90
Market data as of: 07/18/2007
STOCK PRICE: $64.52
ANNUAL DIVIDEND: $0.33
MARKET CAP: $26.58B
PRICE TO EARININGS: $25.34
(TRAILING 12MOS)
PRICE TO EARNINGS: $25.69
(FORWARD 12MOS)
FULL YEAR ENDED 12/31/
2004 2005 2006 2007
Total Net Sales $4,262,300 $4,608,900 $5,147,200 $6,000,500
Sales Growth 17.57% 8.13% 11.68% 16.58%
Operating Income $720,400 $998,800 $1,074,300 $1,307,300
Operating Margin 16.90% 21.67% 20.87% 21.79%
Net Income $465,700 $675,200 $777,700 $1,017,400
Net Margin 10.93% 14.65% 15.11% 16.96%
Earnings Growth 2.69% 44.99% 15.18% 30.82%
Medtronic, inc. (NYSE: MDT)
We are recommending a buy at a price target of: $ 56.50
Market data as of: 07/18/2007
STOCK PRICE: $53.43
ANNUAL DIVIDEND: $0.19
MARKET CAP: $60.12B
PRICE TO EARININGS: $27.37
(TRAILING 12MOS)
PRICE TO EARNINGS: $19.73
(FORWARD 12MOS)
FULL YEAR ENDED 04/25/
2004 2005 2006 2007
Total Net Sales $10,054,600 $11,292,000 $12,299,000 $13,515,000
Sales Growth 10.65% 12.31% 8.92% 9.89%
Operating Income $2,788,900 $3,240,600 $3,698,989 $3,212,000
Operating Margin 27.74% 28.70% 30.08% 23.77%
Net Income $1,803,900 $2,546,700
References: Stryker, 2007 Annual Report Medtronic, 2007 Annual Report http://library.corporate- Accessed on, July 19, 2008. http://webreports.mergent.com