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Stryker Shares Slide After Spruce Point Capital Releases Short Report

Published 06/04/2022, 15:52
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By Sam Boughedda

Investing.com -- Medical technology firm Stryker Corporation (NYSE:SYK) saw its shares fall significantly at the open on Wednesday after short-selling firm Spruce Point Capital released a short report on the company.

Stryker stock opened up around $257.87. It currently trades at about $259.50, down around 3.36%.

Spruce Point said in its short report that while Stryker shareholders had been enjoying an "impressive ride," the "story had now changed."

The short sellers highlighted that the $118 billion company has $16.4 billion of debt and "just" $1.5 billion of unrestricted cash.

"Financial flexibility is lower, actionable targets of size to grow Stryker are fewer, and Stryker’s track record of paying rich premiums for targets is working against it," wrote Spruce Point.

"We believe Stryker left investors flat-footed when the pandemic hit by not warning investors that its true exposure to elective procedures was 50% of sales. Things got so bad for Stryker, that we find evidence it went delinquent on paying property taxes at its global headquarters," they added. 

In a wide-reaching report, Spruce Point also pointed to poor inventory management, supply chain challenges, the company delaying bad news, and Stryker "trying to recruit new analysts such as Evercore and BofA to say “Buy” its stock."

"We believe holding shares at this level represent a poor risk/reward," the investment research firm continued. 

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