Stryker target raised to $101 at Needham -- SYK for SNN makes sense but regulatory risk is high
Needham raises their SYK tgt to $101 from $93. Given increased media speculation that SYK may attempt to acquire Smith & Nephew (SNN) now that its UK-imposed six-month waiting period has ended, they have updated coverage. They still believe that a deal would make sense strategically (by increasing SYK's share in key markets and outside the US) and financially (by being significantly accretive to earnings). However, they acknowledge that regulatory risk is high, especially in light of ZMH's acquisition of Biomet, though they note that other major med tech markets with three players (e.g. CRM and DES) still see considerable price competition. Absent an acquisition of SNN, they would expect SYK to pursue acquisitions in other areas, with spine topping the list.