Stryker Benefits From Rising Joint Replacement Demand While Managing Supply Chain Challenges

Though Stryker posted strong third-quarter results, continued pressure on profitability spurred management to lower its full-year outlook for gross margin, causing shares to bobble in aftermarket trading. The firm’s more conservative expectations dovetail nicely with our projections for 2022 and we’re holding steady on our fair value estimate of $200. Despite several factors dogging the business—component shortages, inflationary pressures, and slower installations of Mako robots—we view these as near-term speed bumps that do not weigh on Stryker’s long-term prospects or wide economic moat.