Stryker Reduces 2008 Guidance
BY LAUREN UZDIENSKI, DECEMBER 19, 2008
Last night, Stryker announced that the company is reducing its revenue and earnings outlook for 2008 on account of the "unprecedented weakening" of the U.S. economy. Constant-currency revenue growth, previously forecast to be 11-12% over 2007, is now expected to be 9-10%.
Diluted net earnings per share are now expected to be in the range of $2.77-$2.79, up 14% over 2007; adjusted diluted net earnings per share are expected to be in the range of $2.82-$2.84, an 18% increase over 2007. Historically, with only one exception related to an acquisition, the company has achieved 20% EPS growth every quarter for the past couple of decades.
In the press release, the company attributed the shortfall to its MedSurg division, which primarily consists of hospital equipment (beds, IV stands, etc.) Stryker reports that hospital customers are no longer buying, with the company noting a "significant and rapid contraction in hospital capital budgets" more dramatic than in previous recessionary periods.
The orthopedic division wasn't mentioned in the press release. So far, it appears that volumes and growth rates for orthopedic devices have been relatively insulated from the turmoil.
