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This Medical Device Maker Is Ankles and Shoulders Ahead

Stryker management has shown foresight by investing in orthopedic extremities and robotics, which will support its wide moat going forward.


Editor's note: At the time of publication (May 4, 2016), a family member of the analyst owned shares in Stryker (SYK) in an account managed by a third party. Morningstar has confirmed that her ownership of Stryker did not influence any ratings or analysis.

Debbie Wang: Even though growth in traditional orthopedic implants, like hips and knees, have started to come under increasing price pressure and slowing growth, we actually remain quite enthusiastic about the orthopedic space in general, partly because manufacturers have been moving in the direction of investing in extremities. By that I mean wrists and ankles and shoulders--joints where we have not been doing a lot of implants. However, there are many people with arthritis in those areas and the existing technology has not been very good. So there are many opportunities to optimize that technology.

We also are quite enthusiastic about where robotics is going. This is a new application of robotics to orthopedics in helping to implant the device more precisely, and we think this could be an important driver going forward.

Of all of the orthopedic companies that we do cover, we are most interested in Stryker at this point. Management has shown some foresight in making investments in these areas of extremities and robotics, which we think will support this company's wide economic moat going forward.

Debbie Wang does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.