Here's Why You Should Hold Stryker Stock in Your Portfolio for Now

Stryker SYK entered 2026 facing an unexpected cyber disruption, yet underlying demand, robotics adoption and international momentum remained strong. While a robust capital pipeline and active acquisition strategy support long-term growth, execution risks tied to recovery efforts, margin pressures and expanding exposure to new markets could shape the company’s performance over the coming quarters.

This Zacks Rank #3 (Hold) company’s shares have lost 6.7% so far this year compared with the industry’s 15.2% decline. The S&P 500 Index has appreciated 11.2% in the same time frame.

Stryker is a global leader in medical technology with a portfolio spanning Orthopaedics, MedSurg and Neurotechnology. The company has a market capitalization of $125.7 billion.

SYK’s bottom line is anticipated to improve 10.4% over the next five years. Its earnings beat estimates in three of the trailing four quarters and missed once, delivering a negative average surprise of 0.73%.

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Let’s delve deeper.

Factors Driving SYK’s Prospects

Broad-Based Organic Growth Demonstrates Strong Underlying Demand: Stryker delivered 9% organic sales growth in the second quarter of 2026, with both MedSurg & Neurotechnology and Orthopaedics posting high-single-digit growth. MedSurg & Neurotechnology increased 9.2%, led by strong performances in Instruments, Endoscopy and Medical, while Orthopaedics grew 8.6%. International sales also remained robust at 8.9%, supported by markets including Australia, Germany, Canada, India and Brazil. The breadth of growth is particularly encouraging because it indicates that demand remains resilient across multiple procedure categories rather than being concentrated in a single product franchise. This provides Stryker with a solid foundation for sustaining its 2026 growth outlook.

Mako Robotics Continues to Expand Competitive Advantage: Mako remains a critical growth engine for Stryker, with more than 2.5 million procedures performed globally and systems installed across 47 countries. U.S. knee sales increased 6.2%, supported by continued Mako adoption, while Ortho Tech grew 9.2% on robust Mako installations. The full commercial launch of Mako Shoulder and Mako RPS further expands the platform's addressable procedure base and strengthens Stryker's ability to compete across knees, hips and shoulders. As robotic-assisted surgery gains acceptance, the installed base should create recurring opportunities for implants, instruments and capital equipment, reinforcing Stryker's ecosystem-based competitive moat.

Margin Expansion and Cost Discipline Encouraging: Stryker's second-quarter performance showed meaningful operating leverage, with adjusted EPS rising 17.9% to $3.69. Adjusted gross margin expanded 60 basis points to 66%, and adjusted operating margin increased 170 basis points to 27.4%. Management attributed the improvement to favorable business mix, cost discipline and lower SG&A as a percentage of sales. This is important because the company continues to absorb costs associated with cybersecurity remediation and manufacturing recovery. Stronger margins suggest that Stryker's operational initiatives are offsetting some of these temporary expenses. If revenue momentum persists, incremental sales should increasingly flow through earnings, supporting management's full-year EPS outlook of $14.95-$15.10.

Downsides

Cybersecurity Incident Continues to Impact Performance: Although Stryker has largely recovered from its cybersecurity incident, the event continues to weigh on 2026 financial performance. The disruption temporarily shut manufacturing facilities, resulting in lost production absorption and idle costs. Management also expects continued spending on cybersecurity remediation and stabilization throughout the year. The company acknowledged that these costs contribute to a wider EPS guidance range and could limit earnings conversion despite strong revenue growth. While production has been ramped and management believes the recovery is progressing, the episode demonstrates the vulnerability of a highly integrated global manufacturing network. Any additional disruption or slower-than-expected normalization could create further costs, supply constraints and pressure on margins.

Peripheral Vascular Supply Disruptions Are Limiting Near-Term Growth: Stryker's Peripheral Vascular business remains a significant near-term weakness following a supply disruption at a manufacturing facility supporting the Inari portfolio. The issue created a meaningful backlog and resulted in lost sales during the second quarter, offsetting otherwise strong U.S. growth. Management expects backorders to reach manageable levels by the end of the third quarter, but the disruption highlights execution risks within a strategically important growth market. Importantly, management estimated the shortfall was meaningful enough to potentially represent roughly 50-75 basis points of organic growth drag. Until production normalizes, Peripheral Vascular is likely to remain a constraint on consolidated growth despite favorable long-term market fundamentals.

Macro Headwinds Could Pressure Earnings: Stryker's second-quarter margin performance benefited from a net tariff benefit, making the underlying sustainability of margin expansion more complicated. Management noted ongoing pressure from oil and other raw materials while also highlighting continued cybersecurity-related expenses and broader macroeconomic uncertainty. Although the tariff benefit supported second-quarter gross margin, these favorable effects are not necessarily recurring, meaning future quarters could face less favorable comparisons. The company expects strong sales growth to provide earnings leverage, but higher input costs could absorb part of that benefit. Consequently, investors should distinguish between structural productivity gains and temporary cost benefits when assessing the durability of Stryker's 2026 margin trajectory.

Stryker Corporation Price and Consensus

Stryker Corporation price-consensus-chart | Stryker Corporation Quote

Estimate Trend

SYK has been witnessing a positive estimate revision trend for 2026. In the past 60 days, the Zacks Consensus Estimate for earnings has increased 3 cents to $15.02 per share.

The consensus mark for third-quarter 2026 revenues is pegged at $6.66 billion, indicating a 10% improvement from the year-ago reported actuals. The bottom-line estimate is pinned at $3.63, implying year-over-year growth of 13.8%.  

Stocks to Consider

Some better-ranked stocks from the broader medical space are Globus Medical GMED, West Pharmaceutical WST and The Cooper Companies COO.

Globus Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted earnings per share (EPS) of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

GMED has an estimated long-term earnings growth rate of 12.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2026 adjusted EPS of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

WST has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.4%.

The Cooper Companies, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2026 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 10%. Revenues of $1.08 billion beat the Zacks Consensus Estimate by 2.6%.

COO has an estimated long-term earnings growth rate of 8.3%. COO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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