After Surveying Surgeons, UBS Says Buy Stryker, Sell Zimmer

This morning, UBS' research team upgraded Stryker (SYK) to Buy from Neutral and downgraded Zimmer Biomet (ZBH) to Sell from Neutral. After conducting a survey of U.S. orthopedic surgeons, the firm believes that Stryker's robotic surgery device can become more widely used in knee surgeries and take share of that market at Zimmer's expense.

Image result for stryker logo

BUY STRYKER: After UBS conducted a survey of 139 U.S. orthopedic surgeons, UBS analyst Matt Miksic believes that Stryker's MAKO robotic device can become more widely used to facilitate knee surgeries in the U.S. Over 80% of current MAKO users said they were interested in utilizing Stryker's new total knee replacement application, Miksic reported. The system is currently only in use "at a small number of locations," but is expected to be fully launched next quarter, the analyst noted. Moreover, of the surgeons who do not currently use MAKO, 27% say they expect to start using the device at some point, and 9% expect to begin using the device within the next year, according to Miksic. He predicted that Stryker's share of the knee surgery market would increase by six percentage points by 2018. After increasing his 2018 estimates for Stryker, Miksic raised his price target on the name to $133 from $121.

SELL ZIMMER BIOMET: Stryker's launch of a total knee replacement application for its robot "will have a much more significant impact" on the overall market than its partial knee offering, Miksic believes. Many of Stryker's gains in total knee replacements will probably come at Zimmer's expense, given the latter company's leading position in the area, the analyst stated. Miksic estimated that Zimmer's share of the knee surgery market would fall by two or three percentage points by 2018. The analyst lowered his 2017 and 2018 estimates for the company and cut his price target on the shares to $100 from $113.

PRICE ACTION: In morning trading, Stryker rose 1% to $118.29 and Zimmer Biomet fell about 2% to $102.85 per share. 


Disclosure: None 

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.