Stryker ( SYK) hit its targets.

The medical device maker reported a strong fourth quarter -- with both its orthopedics and its medical-surgical units faring well -- and issued optimistic guidance for the coming year. Revenue jumped 14% to $1.46 billion, allowing the company to beat crucial top-line projections. Net income surged 28% to $228 million, and operating profits of 55 cents per share matched the consensus estimate exactly.

"Our unique set of businesses delivered a strong finish to 2006," said CEO Stephen MacMillan, "especially in the U.S. "

Shares slipped 2% in late trading Thursday, though, in the wake of a long runup that has taken the stock near a 52-week high.

Stryker enjoyed double-digit revenue growth both inside and outside the country. Sales of orthopedic devices picked up worldwide, climbing 13% in the latest quarter, as the company responded to growing demands for its artificial joints and products for spinal surgeries. Meanwhile, sales of medical and surgical supplies grew at an even faster clip.

Stryker expects that momentum to continue.

"The company's outlook for 2007 continues to be optimistic regarding underlying growth rates in orthopedic procedures and the company's broadly based range of products in orthopedics and other medical specialties, despite the potential for increased pricing pressures in certain markets," Stryker said on Thursday. Thus, "the company projects that diluted net earnings per share for 2007 will approximate $2.42 -- an increase of 20%" over last year's results.

That guidance is a penny better than current analyst estimates, though Wall Street experts had anticipated solid results from the company.

In a research note this week, William Blair analyst Ben Andrew predicted that Stryker would hit Wall Street targets for the fourth quarter and reaffirm its robust guidance for the full year. Andrew was looking for double-digit revenue growth from Stryker's orthopedics division and continued strength from the company's medical-surgical unit as well.

Ultimately, Andrew feels that Stryker's shares could be poised for another bounce.

"Despite a recent run of the stock, we still see further upside for this name," Andrew wrote on Monday. Indeed, "we recently added Stryker to our list of 2007 best stock ideas because we believe the company is well-positioned to thrive in the industry with its diversified and competitive platforms."

Andrew has an outperform rating on Stryker's shares. His colleague, fellow analyst Liping Cai, has a financial stake in the company.

BMO Capital Markets analyst Joanne Wuensch has an outperform rating on Stryker as well. On Tuesday, Wuensch predicted that the company would actually beat Wall Street estimates for the fourth quarter. She figured that the company's new products and expanded sales force would help out.

Going forward, Wuensch looks for Stryker's stock to climb higher as industry pricing concerns continue to ease. Her firm counts the company among its clients.

Even Thomas Weisel Partners analyst Robert Faulkner has started feeling better about the orthopedics group. For more than two years -- during an extended industry downturn -- Faulkner kept warning about top-line risks that did, in fact, materialize. Now, however, he believes that the industry can meet or even beat its financial targets. He simply warns investors against expecting too much from the group too fast.

Personally, Faulkner looks for ongoing signs of recovery -- but no huge surge -- from the industry this quarter.

"If acceleration is what is needed to keep the stocks going, this might be a minor reality check for those who hope that reacceleration can come sooner (i.e., this quarter) than consensus expects," Faulkner wrote this week. "We take comfort that the sector has stabilized but want to be sure our readers' expectations for the fundamentals do not run above what we believe the sector can deliver."

In the meantime, Faulkner feels that Stryker's shares are fairly valued already. Thus, he favors orthopedics heavyweight Zimmer ( ZMH) and smaller Wright Medical ( WMGI) instead.

Faulkner's firm hopes to secure investment banking business from all three companies going forward.

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