Acquisition will lead to increase in revenue
Stryker Corporation (NYSE:SYK)’s neurotechnology and spine segment reported $397 million in sales – up by 4% year over year – in the first quarter of 2013. There is a huge demand for powered instruments in this segment globally. The segment provides rods, screws, and artificial discs used for spinal surgeries. It also provides coils and stents for cerebrovascular surgery, or operations involving the blood vessels of the brain. There is increased demand for these instruments in the U.S. due to a high death rate for diseases of the cerebrovascular system. Due to high demand, the segment will generate revenue of $443 million by end of the fourth quarter.
In the first quarter, Stryker Corporation (NYSE:SYK) acquired Trauson Holdings in order to mark its presence in China and expand in emerging markets. Trauson was a major rival in the spine segment and the main manufacturer of trauma implants in China. This acquisition will help the company to expand its product pipeline, specially the orthopedic implants segment. This segment provides hips, knee, and trauma implants. With this acquisition, the orthopedic implants segment revenue will increase from $969 million in the first quarter to $1 billion by end of fourth quarter. The total revenue expected for this year is $ 8.9 billion and $9.4 billion next year.
Intuitive Surgical, Inc. (NASDAQ:ISRG)’s da Vinci system has strong potential in the Japanese market, and the instruments and accessories segment is likely to grow overall due to increase in demand for the da Vinci system.
There is increasing demand for RDN devices and pacemakers globally. Medtronic, Inc. (NYSE:MDT) will monetize this opportunity and generate high revenue.
By acquiring the major equipment manufacturer in China and the increased demand for neuro powered instruments, Stryker Corporation (NYSE:SYK) has an opportunity to expand in emerging markets while generating high revenue.
Therefore, I recommend buying all three stocks.
The article Big Growth Opportunities for 3 Medical Equipment Makers originally appeared on Fool.com and is written by Madhu Dube.
Madhu Dube has no position in any stocks mentioned. The Motley Fool recommends Intuitive Surgical. The Motley Fool owns shares of Intuitive Surgical and Medtronic. Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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