Financial Data and Key Metrics Changes - For Q4 2025, organic sales growth was 11%, and for the full year, it was 10.3%, surpassing $25 billion in sales [3][11] - Adjusted earnings per share for Q4 was $4.47, up 11.5% year-over-year, while full-year adjusted earnings per share was $13.63, up 11.8% from 2024 [12][19] - Adjusted operating margin was 30.2% for Q4, an increase of 100 basis points compared to Q4 2024 [18] Business Line Data and Key Metrics Changes - MedSurg and Neurotechnology achieved organic sales growth of 12.6% in Q4, with U.S. growth at 13% and international growth at 10.9% [13] - Instruments had U.S. organic sales growth of 19.1%, driven by strong demand in power tools and surgical technologies [13] - Vascular experienced U.S. organic sales growth of 4.3%, with strong performance in the hemorrhagic business offset by competitive pressures in the ischemic sector [14] Market Data and Key Metrics Changes - U.S. organic sales growth was 11.2%, while international organic sales growth was 7.5%, with strong performances in emerging markets like South Korea and Japan [3][4] - The capital environment remains healthy, with robust hospital CapEx budgets and an elevated capital order book entering 2026 [7][30] Company Strategy and Development Direction - The company is focused on maintaining high growth through exceptional talent, active M&A, and systematic specialization by creating new business units [5] - The new SmartCare business unit combines Vocera and CareAI, reflecting the company's strategy to innovate and expand its product offerings [5] - The company expects to continue delivering growth at the high end of medtech, with guidance for 2026 organic net sales growth in the range of 8%-9.5% [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of procedural volumes and the capital environment for 2026, driven by the adoption of robotic-assisted surgery and favorable demographics [7][30] - The company anticipates a slight positive impact from pricing and foreign exchange rates in 2026, with expected tariff impacts of approximately $400 million [20] Other Important Information - Cash from operations for the year was $5 billion, an increase of $802 million from 2024, resulting in free cash flow as a percentage of adjusted net earnings of 81% [19] - The company is set to launch several new products in 2026, including the Mako RPS handheld robot and the Incompass Total Ankle [58][60] Q&A Session Summary Question: Confidence in 2026 organic growth guidance - Management indicated that the strong order book and Mako performance give them confidence to start 2026 with a higher growth range than the previous year, with 10% growth still possible depending on macro conditions [22][23] Question: Impact of leadership changes - The elevation of Spencer Stiles to president and COO is seen as a strategic move to enhance leadership and operational focus, allowing the CEO to concentrate on broader strategic initiatives [25][26] Question: Pricing expectations for 2026 - Management expects pricing to remain stable in 2026, building on previous gains, with a favorable capital environment supporting this outlook [28][30] Question: Performance of specific business lines - Management acknowledged strong performances in Endoscopy and Instruments, while noting challenges in Trauma and Extremities due to tough comparisons from the previous year [32][34] Question: Competitive landscape changes - Management stated that their strategy remains unchanged despite competitors' moves, emphasizing confidence in their market position and product offerings [38][39] Question: Patient volume concerns - Management reported robust patient volumes as they enter 2026, with expectations for mid-single-digit growth in ortho markets [41] Question: Recurring revenue model - Approximately 75% of revenue is procedurally driven, with a significant portion tied to recurring and disposable products [86] Question: Future innovation and product launches - Management highlighted ongoing innovation, including the Mako RPS and other new products, as key drivers for future growth [58][60]

Financial Performance - Fourth quarter net sales increased by 11.4% to $7.2 billion, with organic net sales growth of 11.0%[3] - Full year net sales reached $25.1 billion, reflecting an 11.2% increase, with organic net sales growth of 10.3%[8] - Reported net earnings for the fourth quarter were $0.8 billion, a 55.5% increase, and $3.2 billion for the full year, an 8.5% increase[6] - Adjusted net earnings per diluted share for the fourth quarter increased by 11.5% to $4.47, and for the full year increased by 11.8% to $13.63[7] - The company surpassed $25 billion in revenue, entering 2026 with significant momentum[2] Segment Performance - MedSurg and Neurotechnology segment reported net sales of $4.6 billion for the fourth quarter, up 17.5%, and $15.6 billion for the full year, up 15.7%[4] - Orthopaedics segment net sales were $2.6 billion for the fourth quarter, a 2.2% increase, and $9.5 billion for the full year, a 4.3% increase[5] - The MedSurg and Neurotechnology segment saw a sales growth of 15.7% in 2025, totaling $15.647 billion compared to $13.518 billion in 2024[24] - The Orthopaedics segment reported a sales increase of 4.3% in 2025, totaling $9.469 billion compared to $9.077 billion in 2024[24] Earnings and Margins - Adjusted operating income margin for the fourth quarter increased by 100 basis points to 30.2%[7] - Reported gross profit margin for the fourth quarter was 64.5%[6] - Gross profit margin for Q4 2025 was 64.5%, slightly up from 64.9% in Q4 2024[32] - Total revenue for 2025 was $16,065 million, representing a 64.0% gross profit margin, compared to $14,440 million and 63.9% in 2024[36] Cash Flow and Assets - Net cash provided by operating activities rose to $5.044 billion in 2025, compared to $4.242 billion in 2024, marking a 19% increase[22] - Total assets increased to $47.844 billion in 2025, up from $42.971 billion in 2024, representing a growth of 11.5%[20] - Cash and cash equivalents grew to $4.011 billion in 2025, up from $3.652 billion in 2024, an increase of 9.8%[20] Debt and Liabilities - Long-term debt increased to $14.859 billion in 2025 from $12.188 billion in 2024, reflecting a rise of 21.9%[20] - The company’s total current liabilities rose to $7.794 billion in 2025, compared to $7.616 billion in 2024, an increase of 2.3%[20] Future Outlook - The company expects 2026 organic net sales growth to be in the range of 8.0% to 9.5% and adjusted net earnings per diluted share to be between $14.90 and $15.10[9] - The company anticipates continued growth in revenue and earnings driven by new product launches and market expansion strategies[32] Costs and Adjustments - Acquisition and integration-related costs for 2025 totaled $335 million, significantly higher than $108 million in 2024, driven by employee retention and workforce reductions[38] - Goodwill and other impairments in 2025 amounted to $170 million, a decrease from $977 million in 2024, indicating improved asset management[38] - The effective tax rate for adjusted earnings in 2025 was 15.1%, compared to 14.8% in 2024, indicating a slight increase in tax efficiency[36]

Core Insights - Stryker reported strong financial results for Q4 and the full year of 2025, achieving double-digit sales growth and adjusted earnings per share growth, with a notable operating margin expansion for the second consecutive year [2][6][12]. Q4 Results - Consolidated net sales for Q4 reached $7.2 billion, reflecting an 11.4% increase, with organic net sales growing by 11.0% [3][12]. - MedSurg and Neurotechnology segment net sales were $4.6 billion, up 17.5%, while Orthopaedics segment net sales increased by 2.2% to $2.6 billion [4][5]. - Adjusted net earnings for Q4 were $1.7 billion, marking an 11.6% increase, with adjusted earnings per diluted share rising to $4.47, a 11.5% increase [6][12]. Full Year Results - Total net sales for 2025 were $25.1 billion, an 11.2% increase from the previous year, with organic net sales growing by 10.3% [3][12]. - MedSurg and Neurotechnology segment net sales for the full year were $15.6 billion, up 15.7%, while Orthopaedics segment net sales increased by 4.3% to $9.5 billion [4][5]. - Reported net earnings for the full year were $3.2 billion, an 8.5% increase, with earnings per diluted share at $8.40, up 8.2% [6][12]. Earnings Analysis - Reported gross profit margin for Q4 was 64.5%, while the full year margin was 64.0% [6][12]. - Adjusted operating income margin increased by 100 basis points to 30.2% for Q4 and 26.3% for the full year [6][12]. - The company experienced a significant increase in operating income, with Q4 operating income at $1.8 billion, a 210.5% increase [6][12]. 2026 Outlook - Stryker anticipates organic net sales growth for 2026 to be in the range of 8.0% to 9.5%, with adjusted net earnings per diluted share expected to be between $14.90 and $15.10 [7]. - The company expects a modestly favorable pricing impact and a slight positive effect from foreign exchange rates on sales and earnings [7]. Sales Growth Analysis - The U.S. market contributed significantly to sales, with Q4 sales of $5.4 billion, an 11.7% increase, and full year sales of $19.0 billion, a 12.2% increase [24]. - International sales for Q4 were $1.7 billion, up 10.6%, and full year international sales reached $6.1 billion, an 8.1% increase [24]. Segment Performance - In the MedSurg and Neurotechnology segment, instruments sales increased by 17.1% in Q4, while vascular sales surged by 58.1% [26]. - Orthopaedics segment saw knee sales grow by 8.9% and hip sales by 8.1% in Q4 [26]. Financial Position - As of December 31, 2025, total assets were $47.8 billion, up from $43.0 billion in 2024, with cash and cash equivalents at $4.0 billion [19][20]. - Total liabilities increased to $25.4 billion, with long-term debt at $14.9 billion [20]. Cash Flow Analysis - Net cash provided by operating activities for 2025 was $5.0 billion, compared to $4.2 billion in 2024 [22]. - The company invested $4.9 billion in acquisitions, net of cash acquired, indicating a strong focus on growth through strategic investments [22].

Core Insights - Stryker Corporation (SYK) is set to announce its fourth-quarter 2025 results on January 29, with a previous earnings surprise of 1.59% [1] Q4 Estimates - The Zacks Consensus Estimate for earnings is $4.39 per share, reflecting a year-over-year increase of 9.5% [2] - Revenue consensus is projected at $7.13 billion, indicating a growth of 10.8% compared to the previous year [2] - Model estimates for total sales and adjusted earnings per share are $7.11 billion and $4.35, respectively [2] Factors to Note - Stryker is anticipated to report strong performance in Q4, driven by sustained procedural strength, robust capital demand, and successful product launches, despite tariff-related cost pressures [3] - Top-line growth is expected to stem from broad-based demand across Orthopedics, MedSurg, and Neurotechnology, along with improved execution at the Inari business [3][4] Revenue Growth Drivers - Organic revenue growth is likely supported by stable and resilient procedure volumes across various geographies [4] - Strong hospital balance sheets are facilitating capital spending, with Stryker exiting Q3 with a high backlog and strong order books [4] Margin and Cost Dynamics - Margin expansion efforts are expected to yield positive results through favorable product mix, manufacturing efficiencies, and disciplined SG&A [6] - However, tariff pressures and increased interest expenses from recent debt issuance may limit incremental margin growth [6][7] Segment Performance - Orthopedics is projected to be a key growth driver, with knee and hip businesses likely achieving high-single-digit organic growth due to robotic-assisted surgery adoption and Mako installations [8] - The "Other Ortho" category is expected to remain a significant contributor, supported by a robust capital environment [10] - MedSurg and Neurotechnology segments are likely to maintain strong momentum, benefiting from broad-based growth and specific product demand [11][13] Earnings Prediction Model - The current model does not predict an earnings beat for Stryker, as the Earnings ESP is -0.24% and the company holds a Zacks Rank of 3 [14][15]

Upgrades - CoStar Group (CSGP) upgraded to Buy from Neutral with an $80 price target due to low expectations, past peak investment, and momentum from Homes.com, along with an anticipated AI-driven product update [2] - Teleflex (TFX) upgraded to Buy from Hold with a $138 price target as the company plans to sell its acute care, interventional urology, and manufacturing businesses for $2 billion, expecting significant earnings accretion from share repurchases and debt repayment by 2027 [3] - CoreWeave (CRWV) upgraded to Buy from Hold with a $140 price target, with a solid medium-term outlook ahead of the Q4 report [3] - Affirm (AFRM) upgraded to Buy from Hold with a $100 price target after submitting an application to establish Affirm Bank, which could be a game-changer [4] - Target (TGT) upgraded to Peer Perform from Underperform without a price target, with a wide margin of safety despite reduced estimates due to the company's owned real estate [4] Downgrades - Procter & Gamble (PG) downgraded to Hold from Buy with a price target of $156, up from $150, as the pace of recovery is expected to drag [5] - Stryker (SYK) downgraded to Hold from Buy with a $387 price target following a transfer in analyst coverage, with a well-understood valuation reflecting a "beat/raise precedent" [5] - Insulet (PODD) downgraded to Hold from Buy with a $294 price target after a transfer in analyst coverage, noting that competitive advantages may narrow [5] - Matador (MTDR) downgraded to Equal Weight from Overweight with a price target of $47, down from $61, due to stock valuation incorporating structural considerations and recent productivity variability [5] - SkyWater Technology (SKYT) downgraded to Hold from Buy with a price target of $35, up from $24, after agreeing to be acquired by IonQ for $35 per share or $1.88 billion [5]

Core Viewpoint - The Zacks Style Scores provide a framework for investors to evaluate stocks based on value, growth, and momentum, enhancing the decision-making process for stock selection [2][3][7]. Summary by Category Zacks Style Scores - The Zacks Style Scores rate stocks using a grading system from A to F, with A being the highest score indicating a better chance of outperforming the market [3]. - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6]. Value Score - The Value Score helps investors identify undervalued stocks by analyzing financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3]. Growth Score - The Growth Score emphasizes a company's financial health and future growth potential, considering projected and historical earnings, sales, and cash flow [4]. Momentum Score - The Momentum Score assists investors in capitalizing on stock price trends, utilizing metrics like one-week price changes and monthly earnings estimate changes [5]. VGM Score - The VGM Score combines the three Style Scores to identify stocks with attractive value, strong growth forecasts, and promising momentum, serving as a useful indicator alongside the Zacks Rank [6]. Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.83% since 1988, significantly outperforming the S&P 500 [7][8]. Stock Example: Stryker (SYK) - Stryker is a leading medical technology company, generating approximately 60% of its sales from MedSurg & Neurotechnology and 40% from Orthopaedics, with about 75% of revenue coming from the U.S. market [12]. - Stryker holds a 3 (Hold) rating on the Zacks Rank and has a VGM Score of B, with a Momentum Style Score of B, indicating potential for investors [13][14].

Core Insights - Stryker (SYK) is expected to report quarterly earnings of $4.39 per share, reflecting a 9.5% increase year-over-year, with revenues projected at $7.13 billion, a 10.7% increase compared to the previous year [1] Earnings Projections - Analysts have revised the consensus EPS estimate for the quarter upward by 0.1% over the past 30 days, indicating a collective reassessment of projections [1][2] Revenue and Sales Estimates - Analysts predict 'Net Sales by Business- MedSurg and Neurotechnology' to be $4.53 billion, representing a year-over-year increase of 16.8% [4] - The average estimate for 'Net Sales by Geography- Orthopaedics' is $2.61 billion, indicating a 2.3% increase from the prior-year quarter [4] - 'Net Sales by Geography- Orthopaedics- Hips' is expected to reach $504.79 million, reflecting a 9% year-over-year change [5] - 'Net Sales by Geography- United States' is forecasted at $5.44 billion, suggesting an 11.5% increase year-over-year [6] Specific Sales Forecasts - 'Net Sales by Geography- Orthopaedics- United States' is estimated at $1.87 billion, indicating a 17.7% year-over-year change [6] - 'Net Sales by Geography- Orthopaedics- Trauma and Extremities- United States' is projected to be $828.44 million, reflecting an 11.4% increase from the year-ago quarter [6] - 'Net Sales by Geography- Orthopaedics- Knees- United States' is expected to reach $553.93 million, indicating an 8.8% year-over-year change [7] International Sales Estimates - 'Net Sales by Geography- International' is projected at $1.72 billion, reflecting a 10.2% increase year-over-year [5] - 'Net Sales by Geography- MedSurg and Neurotechnology- Neuro Cranial- International' is expected to be $118.93 million, indicating a decline of 21.8% from the prior-year quarter [8] - 'Net Sales by Geography- MedSurg and Neurotechnology- vascular- International' is estimated at $241.70 million, reflecting an 18.5% increase from the year-ago quarter [8] Market Performance - Stryker shares have shown a return of +0.2% over the past month, mirroring the Zacks S&P 500 composite's +0.2% change, with a Zacks Rank 3 (Hold) indicating expected performance in line with the overall market [10]

Industry Overview - The global medical device industry is experiencing rapid technological advances and innovations, with the U.S. market projected to grow at a CAGR of 6.8% from 2025 to 2032 [1] - Hologic and Stryker are two prominent players in this sector, focusing on women's health and surgical products respectively [1][2] Hologic Insights - Hologic's market capitalization is currently $16.71 billion, and it is undergoing a buyout process by Blackstone & TPG, which is expected to enhance its growth and technology delivery [2][1] - The Diagnostics division is anticipated to show strong performance driven by U.S. molecular diagnostics sales, particularly from the BV, CV/TV vaginitis assay and Panther Fusion assays [3] - Recent FDA and CE approvals for new diagnostic products, including the Panther Fusion Gastrointestinal Bacterial Assays, signify advancements in Hologic's diagnostic capabilities [3] - The Breast Health segment is expected to benefit from improved U.S. sales execution and the inclusion of Endomagnetics, which may positively impact revenues [4] Stryker Insights - Stryker has a larger market capitalization of $139.1 billion and operates in approximately 75 countries, with strong demand for its capital products expected to continue [2][5] - The company anticipates achieving 10% organic sales growth for the year despite supply-chain disruptions, driven by strong demand for its LIFEPAK 35 monitor/defibrillator [6] - Stryker's recent acquisition of Inari Medical is expected to enhance its position in the high-growth peripheral vascular segment [7] - The Orthopaedics division is likely to see robust growth due to the success of the Insignia Hip Stem and the Mako robotic hip platform [8] Earnings Estimates - Hologic's first-quarter fiscal 2026 earnings are estimated to grow by 5.8% year over year to $1.09, with a slight upward revision in estimates [11] - Stryker's fourth-quarter 2025 earnings are projected to grow by 9.5% year over year to $4.39, with stable estimates over the past 60 days [13] Price Performance and Valuation - Hologic shares have increased by 17.7% over the past six months, while Stryker shares have declined by 6.1% [13] - Hologic trades at a forward two-year P/E of 16.15X, which is lower than its median and compares favorably to Stryker's P/E of 24.14X [15] Conclusion - Hologic is positioned favorably with solid fundamentals and a Zacks Rank 2 (Buy), while Stryker holds a Zacks Rank 3 (Hold) and is expected to demonstrate strong operational performance [16] - Both companies are projected to show year-over-year earnings growth, with Hologic's recent performance and valuation providing it an edge in the market [16]

Core Viewpoint - The comparison between Envista (NVST) and Stryker (SYK) indicates that NVST is currently a more attractive option for value investors due to its stronger earnings outlook and favorable valuation metrics [1][2]. Valuation Metrics - Envista has a forward P/E ratio of 19.27, while Stryker's forward P/E is 23.99, suggesting that NVST is more reasonably priced relative to its earnings [4]. - The PEG ratio for NVST is 1.08, indicating a better valuation when considering expected earnings growth, compared to SYK's PEG ratio of 2.30 [4]. - Envista's P/B ratio stands at 1.29, significantly lower than Stryker's P/B ratio of 6.31, further supporting NVST's position as a better value option [5]. Investment Grades - Envista holds a Zacks Rank of 2 (Buy), while Stryker has a Zacks Rank of 3 (Hold), reflecting a more favorable earnings outlook for NVST [2]. - Based on valuation figures, Envista has a Value grade of B, whereas Stryker has a Value grade of C, indicating that NVST is the superior value option at this time [5].

Core Insights - The JPM Health Conference highlighted a shift in focus among major medical device companies from investment narratives to growth execution, emphasizing the importance of mergers and acquisitions, AI integration, and organizational restructuring for future growth [2][4]. Medtronic - Medtronic's leadership emphasized a transition to a "growth execution phase," with a focus on accelerating growth through existing technologies and strategic acquisitions, particularly smaller tuck-in acquisitions [6][7]. - The company plans to launch its Hugo surgical robot system in the U.S. in 2026, targeting soft tissue surgery as a key growth area, and sees significant market potential in cardiac electrophysiology and renal denervation [7][8]. - Medtronic aims for mid-to-high single-digit revenue growth in 2026, driven by advancements in ASC penetration and AI-enabled surgical planning [8]. Boston Scientific - Boston Scientific reported over 10% revenue growth for three consecutive years, driven by core products like PFA and WATCHMAN, with a focus on maintaining high growth in the electrophysiology market [10][11]. - The company aims to enhance the overall adoption of arrhythmia treatments and expand its product offerings, including the FARAPOINT catheter, to new indications [11]. - Boston Scientific's growth strategy includes targeting outpatient surgical centers and advancing its clinical pipeline with new innovations [11]. Stryker - Stryker's CEO highlighted the importance of mergers and acquisitions, particularly in orthopedics and neurology, while focusing on enhancing the Mako robotic platform [12][14]. - The company expects to achieve 7%-9% revenue growth in 2026, with a strong emphasis on outpatient surgical centers as a significant growth driver [14]. Johnson & Johnson - Johnson & Johnson's CEO indicated a return to fundamentals, with a focus on execution and long-term growth, planning to invest approximately $55 billion in new facilities and R&D, particularly in MedTech [15][17]. - The company is preparing for regulatory milestones for its Ottava surgical robot system, with significant contributions expected post-2028 [17][18]. - J&J's strategy includes strategic investments in robotic systems to enhance its outpatient surgical capabilities [18]. Intuitive Surgical - Intuitive Surgical's focus remains on expanding its da Vinci system and integrating AI functionalities to improve surgical efficiency [19][20]. - The company anticipates a competitive landscape in soft tissue robotics but believes its established ecosystem provides a competitive advantage [20]. - Intuitive expects revenue growth of 12%-15% in 2026, driven by increased surgical volumes and international market expansion [20]. Alcon - Alcon is committed to innovation in eye health, focusing on surgical and vision care segments, with a significant emphasis on enhancing operational efficiency [22][23]. - The company aims to launch 10-15 new products over the next two years, maintaining an annual R&D investment of around $1 billion [23]. Abbott - Abbott's strategy emphasizes stable execution, particularly in diabetes management, with plans to expand the FreeStyle Libre system's applications [24]. - The company expects 8%-10% revenue growth in its MedTech business for 2026, focusing on internal innovation and operational efficiency [24]. GE Healthcare - GE Healthcare is shifting its AI capabilities towards standalone software tools, emphasizing the commercialization of AI in imaging [25]. - The company plans to simplify its product offerings to enhance customer experience and reduce internal costs, aiming for organic growth through advanced imaging technologies [25]. Illumina - Illumina's growth strategy focuses on sequencing, multi-omics, and scaling services, with a strong emphasis on partnerships to accelerate drug development [29][30]. - The company aims to maintain a balanced approach between innovation investment and shareholder returns, with a positive outlook for the Chinese market [30]. Edwards Lifesciences - Edwards Lifesciences is focused on structural heart disease, with a commitment to innovation in TAVR and TMTT platforms, expecting 8%-10% sales growth [33][34]. - The company is addressing regulatory challenges while continuing to invest in breakthrough therapies and expanding market access [34]. Jabil - Jabil's CEO discussed the company's transformation and focus on integrating recent acquisitions, with a strategic emphasis on improving sales efficiency in the U.S. market [36][37]. - The company plans to launch new products and leverage AI technology to enhance its offerings in the orthopedic sector [37]. Conclusion - The overall sentiment from the JPM26 conference indicates that major medical device companies are prioritizing alignment of products, organizational structure, and capital utilization to drive growth, rather than focusing solely on new technologies [40].