STRYKER CORP (SYK): what the price requires
At today's price, STRYKER CORP (SYK) is priced for today's economics sustained for ~5.7 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/SYK
Headline
| Field | Value |
|---|---|
| Ticker | SYK |
| Company | STRYKER CORP |
| Sector / Industry | Healthcare |
| Current price | $331.66/sh |
| Composition | Instruments 13% / Endoscopy 15% / Medical 17% / Vascular 8% / Neuro Cranial 10% / Knees 11% / Hips 7% / Trauma and Extremities 16% / Spinal Implants 1% / Other 3% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.7% |
| Operating margin today | 15.9% |
| Margin compression implied | -8.2pp |
| Must persist for | 5.7y |
| Multiple paid | 33x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.7% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +1.17σ |
| cohort percentile (of 112 peers) | 82 |
| sustained it ~5.7 years at this level | 34% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.72x | 4 | expensive |
| Earnings | 3.73x | 5 | expensive |
| Relative | 1.38x | 5 | expensive |
| Growth | 1.12x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $296.73 | 1.12x | yes | FCF base $4.8B, growth 9% (input: historical growth), terminal g 4.0%, WACC 8.4%, 6yr projection |
| DCF Exit Multiple | Growth | $357.01 | 0.93x | yes | Exit EV/EBITDA: 19.3x / 21.3x / 23.3x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $240.34 | 1.38x | yes | P/E 30.65x (blended: static sector reference 24x + trailing (TTM) 46x), scenarios: 25.6x / 30.6x / 35.7x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $77.65 | 4.27x | yes | BV/sh $59.45, ROE (TTM) 12.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $88.20 | 3.76x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $285.09 | 1.16x | yes | Rev $25.3B, growth 9% (input: historical growth; tapered), Terminal P/S: 4.2x / 5.1x / 5.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $143.73 | 2.31x | yes | EPS $7.19, growth 20% (input: historical EPS growth), PEG=2.31 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $75.67 | 4.38x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.95B × (1−12%) / WACC 8.4% → EPV (no growth) |
| Residual Income | Asset | $90.34 | 3.67x | yes | BV $59.45 + 5yr PV of (ROE (TTM) 12.1% − Kₑ 9.3%) × BV; BV grows 7.9%/yr |
| Graham Number | Asset | $98.04 | 3.38x | yes | √(22.5 × EPS $7.19 × BVPS $59.45) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $241.00 | 1.38x | yes | EBITDA $6.59B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $95.89 | 3.46x | yes | FCF $4571.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $89.01 | 3.73x | yes | SBC-adj FCF $4.33B (FCF $4.57B − SBC $0.25B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $231.84 | 1.43x | yes | EPS $7.19 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $16.52 | 20.08x | yes | BV $59.45 × (ROIC 2.3% / WACC 8.4%) (excluded from median) |
| P/Sales Sector | Relative | $261.53 | 1.27x | yes | Revenue $25.27B × sector P/S 4.0x |
| PEG Fair Value | Relative | $215.60 | 1.54x | yes | EPS $7.19 × (PEG 1.5 × growth 20.0% (input: historical EPS growth)) → PE 30.0x |
| Earnings Yield | Earnings | $77.68 | 4.27x | yes | EPS $7.19 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $11.8b |
| Net debt / NOPAT (after-tax) | 3.34x |
| Net debt / operating income (pre-tax) | 2.92x |
| Interest coverage | 6.8x |
| Share count CAGR (dilution) | 0.2% |
| Burning cash | no |
Bullet Takeaways
- Stryker's robotics franchise is compounding through everything: the first quarter set a record for Mako installations in the US and internationally despite a cyberattack that held organic sales growth to 2.4%, and management still reaffirmed full-year guidance of 8% to 9.5% organic growth with adjusted EPS of $14.90 to $15.10.
- The price is paying most richly for the Orthopaedics side: today's quote embeds roughly 24% annual operating-profit growth for five years in that segment, a pace only about 36% of comparable fast-growers sustained, with the multiple at the very top of the peer distribution.
- Watch the second-quarter print for the post-cyber recovery, the Mako 4 and handheld RPS rollout into surgery centers, and integration of the roughly $435 million Amplitude Vascular acquisition announced in May.
Bull Case
The moat shows up most clearly in a competitor's filing. Zimmer Biomet's own 10-K lists its major competitors in knees, hips, and related products as "Johnson & Johnson MedTech (formerly the DePuy Synthes Companies of Johnson & Johnson), Stryker Corporation and Smith & Nephew plc" (accession 0001193125-26-059853), a four-firm oligopoly where surgeon training, hospital contracts, and installed equipment make share sticky for decades. Within that structure Stryker owns the accelerant: the Mako robotic platform, which posted a record quarter of installations in the US and internationally this spring with high utilization and, per management, no visible competitive pressure. Every installed robot pulls through implants, service, and software for years, which is how a scale player converts a capital-equipment sale into an annuity.
The breadth is the second layer of defense. The 10-K describes a portfolio spanning "surgical equipment and surgical navigation systems; endoscopic and" related technologies across MedSurg, Neurotechnology, and Orthopaedics (accession 0000310764-26-000010), and the faster half of the company is not the robot: the same filing reports "MedSurg and Neurotechnology net sales in 2025 increased 15.7% as reported and 15.4% in constant currency" (same accession). A $25.3 billion revenue base growing double digits in its larger division, with $4.6 billion of trailing free cash flow, funds a serial-acquisition engine that just added Amplitude Vascular Systems for roughly $435 million plus milestones to push into cardiovascular intervention.
The first quarter itself made the durability argument better than any narrative could. A late-quarter cyberattack cut organic growth to 2.4% and dropped adjusted EPS 8.5%, and management did not touch the full-year guide: 8% to 9.5% organic growth, $14.90 to $15.10 in adjusted EPS. Companies reaffirm through a quarter like that only when order books, procedure backlogs, and pricing give them cover. With net debt at a comfortable 2.4 times trailing pre-tax operating income and the Mako 4 and handheld RPS platforms opening the fast-growing ambulatory surgery center channel, the bull case is a moat that is widening while the market argues about the toll.
Bear Case
The competition is no longer only the familiar oligopoly. Medtronic is integrating spinal implants with imaging and navigation through its AiBLE offering (accession 0001613103-25-000091, Medtronic 10-K), Johnson & Johnson MedTech and Zimmer Biomet are pushing their own robotic and enabling-technology ecosystems into the same operating rooms, and Boston Scientific's filing is a reminder that medical device markets face "technological changes in the medical devices industry or low-cost competitive offerings" (accession 0000885725-26-000010). Stryker's robotics lead is real today, but every major competitor is spending to neutralize exactly that advantage, and in surgical robotics the second mover's product tends to arrive cheaper.
Pricing is the slower, heavier pressure. Stryker's own 10-K concedes that "we have also reduced prices for certain products due to increased competition" and warns that payer-driven "downward pricing pressures... may result in an adverse effect on our business, results of operations, financial condition and cash flows" (accession 0000310764-26-000010). The same filing flags China's "volume-based procurement process designed to decrease prices" and the EU MDR compliance timelines running into 2028 (same accession). Device pricing worldwide is a ratchet that turns one way, and it turns against the premium-priced incumbent first.
Now set that against what the price already assumes. Today's $329.44 embeds roughly 24% annual operating-profit growth for five years in the Orthopaedics segment specifically, a multiple at the very top of the peer distribution; historically only about 36% of comparable fast-growers sustained that pace. Joint replacement is ultimately a procedure-volume business tied to demographics, not a hypergrowth market, so the priced-in assumption leans almost entirely on Mako-driven share gains and mix continuing uninterrupted, precisely the variable competitors are targeting. The static methods register the stretch: asset and earnings-power reads sit at roughly a quarter of the price, peer multiples about 27% below, and only the growth projections reach the quote. Add a first quarter that showed operational fragility of a modern kind, a cyberattack material enough to cut EPS 8.5%, and the bear case writes itself: a wonderful company at a price that requires the next five years to go as well as the last five, against a field that has finally started shooting at the robot.
Valuation
The premium in Stryker's price has an address: Orthopaedics. Decomposed, today's $329.44 implies that segment's operating profit compounds at roughly 24% a year for five years, an assumption sitting at the very top of the peer multiple distribution, and one that only about 36% of comparable fast-growers historically sustained for that long. The method families sort accordingly. Only the forward-growth projections reach the price, and the exit-multiple variant does so by holding today's 21 times EV/EBITDA flat for six years; peer multiples land about 27% below even at a blended 31 times earnings; asset and earnings-power reads sit at roughly a quarter of the quote, reading the 12.1% trailing return on equity and $7.19 of trailing GAAP earnings at face value. That pattern is the signature of a durability premium: the market is paying for compounding the static frames cannot see, anchored on the Mako installed base and the M&A engine.
The filing supplies the growth evidence the premium leans on: "MedSurg and Neurotechnology net sales in 2025 increased 15.7% as reported and 15.4% in constant currency" (accession 0000310764-26-000010), on a company-wide revenue base of $25.3 billion. The gap between trailing GAAP earnings and the $14.90 to $15.10 adjusted guide is the usual acquisitive-medtech wedge of amortization and deal charges; the cash statement splits the difference at $4.6 billion of trailing free cash flow. Solvency is unremarkable in the good sense: $11.8 billion of net debt runs 2.4 times trailing pre-tax operating income with 8.1 times interest coverage and a flat share count, leaving room for deals like the $435 million Amplitude Vascular purchase without straining anything. The price does not rest on the balance sheet or this year's guide; it rests on Orthopaedics compounding near-triple its market's natural rate for half a decade, which is the specific bet a buyer at $329.44 is underwriting.
Catalysts
The second-quarter report, due on the company's usual late-July cadence, carries an unusually clean test: whether the business snapped back from the late-first-quarter cyberattack the way a reaffirmed guide implies. The first quarter printed 2.4% organic growth and an 8.5% decline in adjusted EPS on the incident, yet management held full-year guidance of 8% to 9.5% organic sales growth and adjusted EPS of $14.90 to $15.10. A clean recovery quarter validates the guide and the premium; lingering disruption would put both in play.
The product calendar centers on robotics. Mako installations set a first-quarter record in the US and internationally, and the Mako 4 platform plus the new handheld Mako RPS system aim directly at the ambulatory surgery center channel, where joint replacement volumes are migrating. Installation counts and utilization commentary each quarter are the leading indicators for the implant pull-through that the Orthopaedics premium depends on, and the newly launched Ortho Tech business is management's structural bid to accelerate that segment. On the M&A track, the Amplitude Vascular Systems acquisition, roughly $435 million in cash plus up to $400 million in milestones announced in May, extends the company into cardiovascular intervention, and management has signaled continued deal appetite with balance-sheet capacity to match. Regulatory backdrop items to monitor: the EU MDR transition deadlines running from May 2026 through December 2028, which the 10-K says the company is on track to meet (accession 0000310764-26-000010), and China's volume-based procurement rounds, which set the pricing weather for the international business.
Peer Cohorts (Per Segment, With Filing Citations)
MedSurg and Neurotechnology (reported)
- ZBH (ZIMMER BIOMET HOLDINGS, INC.)
- (no filing in the citation store)
- MDT (Medtronic plc)
- (no filing in the citation store)
- BSX (BOSTON SCIENTIFIC CORP)
- (no filing in the citation store)
- SOLV (SOLVENTUM CORPORATION)
- (no filing in the citation store)
- BDX (BECTON DICKINSON & CO)
- (no filing in the citation store)
- RMD (ResMed Inc.)
- (no filing in the citation store)
- GEHC (GE HEALTHCARE TECHNOLOGIES INC.)
- (no filing in the citation store)
- STE (STERIS plc)
- (no filing in the citation store)
Orthopaedics (reported)
- MDT (Medtronic plc)
- (no filing in the citation store)
- BSX (BOSTON SCIENTIFIC CORP)
- (no filing in the citation store)
- ABT (ABBOTT LABORATORIES)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings call, April 2026 · company announcement, May 2026