Stryker cuts 2026 outlook after $3.52 per-share profit and revenue miss
Key Facts
Stryker reported third-quarter results on October 29, posting adjusted earnings of $3.52 per share, below analysts’ estimate of $3.55, and revenue of $6.5 billion against expectations of $6.62 billion. The company cut its full-year sales and adjusted earnings forecasts, signaling that quarterly performance did not meet management’s targets. Chief Executive Kevin Lobo said organic sales growth and adjusted earnings reflected "good overall performance," but "came in below our expectations." Dow Jones reported that shares fell 7.6% to $288 in after-hours trading following the results. The announcement came after the close of the October 28 session, when SYK shares had finished at $304, so that close preceded the results and does not reflect the market’s reaction to them.
The overall disappointment was evident in revenue and adjusted earnings per share, even as one measure of operating profitability improved. Adjusted operating margin rose 60 basis points to 26.2%, while reported operating margin was 15.9%. The margin increase does not change the fact that quarterly revenue fell short of analysts’ consensus and adjusted earnings per share also missed their estimate. Meanwhile, reported net earnings fell 12.3% year over year to $753 million, and reported diluted earnings per share declined 11.7% to $1.96. These figures show a divergence between the improvement in adjusted margin and the decline in reported earnings compared with the same quarter a year earlier.
By business, MedSurg and Neurotechnology sales totaled about $3.7 billion, up 9.2%, while Orthopaedics sales were $2.9 billion, up 5.7%. The results came as investors focused on manufacturing constraints in the peripheral vascular business and weak seasonality in joint replacements, particularly hips. The company said the impact of supply constraints would continue into the fourth quarter. Stryker had beaten analysts’ consensus for earnings in the second quarter, posting $3.69 per share against an estimate of $3.49. But third-quarter results fell short of estimates, and the company’s statement that constraints would persist refocused attention on whether business growth can keep pace with management’s expectations.
Stryker lowered its 2026 organic sales growth range to 6.5%-7.0%, from a previous range of 8.3%-9.3%. It also cut its adjusted earnings-per-share forecast to $14.80-$14.90, from previous guidance of $14.95-$15.10. The cuts mean the company expects lower growth and profitability than indicated in its prior guidance, which it had maintained when it reported July results. That puts management’s comments about expecting strong fourth-quarter performance and good momentum heading into 2027 in the context of the operational challenge it faces after lowering its current-year estimates. The fourth quarter will be the near-term test of the company’s ability to manage supply constraints and improve performance in key businesses.
On capital allocation, the company repurchased $1.0 billion of shares during the third quarter. Its board also approved a $3.0 billion increase to the existing buyback program in October. The move came alongside the cut to its full-year outlook, as attention turns to whether the company can deliver the strong fourth-quarter performance it expects. The last documented close before the results announcement was $304 on October 28, after which shares fell to $288 in post-announcement trading, according to Dow Jones. This places the share-price reaction in its proper sequence, following the release of results the day after the previous close.