Key Moments
- Wolfe Research downgraded Stryker to Peer Perform, highlighting a challenging second-half setup following a March cyber incident.
- The firm upgraded Abbott Laboratories to Outperform with a $130 price target, pointing to what it views as a stronger 2027 outlook.
- Stryker’s guidance indicates 54% of full-year revenue is expected in the second half, while Wolfe sees Abbott benefiting from multiple product and cost catalysts.
Rating Actions Across Major Med-Tech Names
Wolfe Research adjusted its views on two large-cap medical device companies on Thursday, lowering its rating on Stryker while turning more positive on Abbott Laboratories.
Analyst Mike Polark downgraded Stryker to Peer Perform and simultaneously upgraded Abbott to Outperform, citing differing risk-reward profiles and growth setups heading into 2027.
Concerns Mount Over Stryker’s Second-Half Dependence
Polark reduced his stance on Stryker after what he described as a demanding outlook for the remainder of the year, following the company’s cyber disruption in March.
He noted that the June quarter performance did not fully make up for earlier disruptions, stating the June quarter “wasn’t a huge catch up thus year not yet de-risked,” which in his view leaves “a higher-than-normal burden on 2H to deliver.”
According to Wolfe Research, this backdrop tilts the near-term bias for forecasts to the downside, with the firm stating that the trajectory of Stryker’s growth is “more likely to slow to 8% vs speed up to 10% in 2027.”
Stryker Guidance, Seasonality, and Valuation
Wolfe highlighted that Stryker’s current guidance requires 54% of its full-year revenue to be generated in the second half of the year. This compares with an average range of 52% to 53% for the 2017 to 2025 period, excluding 2020.
At the same time, the firm underscored that Stryker’s valuation sits near what it described as almost the highest levels seen over the past 15 years. Wolfe characterized the stock’s roughly 22 times earnings multiple as “fair,” and concluded that the overall risk/reward profile appears balanced rather than compelling at this stage.
| Company | Action | New Rating | Key Rationale |
|---|---|---|---|
| Stryker | Downgrade | Peer Perform | Heavy 2H revenue dependence, slower growth outlook, and valuation at elevated levels |
| Abbott Laboratories | Upgrade | Outperform | More attractive 2027 setup supported by product and cost catalysts |
Abbott Upgraded on More Attractive 2027 Setup
Turning to Abbott Laboratories, Polark raised his rating on the stock to Outperform and assigned a $130 price target, arguing that the company’s positioning heading into 2027 appears more favorable.
He cited six potential catalysts supporting the improved outlook. Among them, he highlighted “offense in Electrophysiology” as the Volt PFA catheter advances toward full U.S. launch. He also pointed to a rebound in Libre continuous glucose monitors, expecting growth to move back toward 10%-plus on the back of easier comparisons and the possibility of Medicare coverage.
Cost Synergies and Business Segment Tailwinds at Abbott
Beyond product drivers, Polark pointed to what he sees as underappreciated cost benefits. He stated that cost synergies stemming from the Exact Sciences deal were “under-guided,” implying additional upside potential from efficiencies.
He also noted that Abbott faces easier comparison periods ahead in its nutrition franchise and in its China core lab operations, which Wolfe believes could further support performance as those businesses cycle past tougher prior-year benchmarks.
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