Recommendation: Sell Stryker (SYK)

Healthcare holdings

•Abbott Labs (ABT) •Stryker Corp (SYK)•Healthcare Select ETF (XLV)

Rationale for Sale

•New CEO, no full time CFO• Better opportunities elsewhere

•Healthcare indices have rallied this year, with only modest gains by SYK •Starting in 2013, the Affordable Care Act mandates a 2.9% tax on all revenue related to medical devices

• Volatility associated with the election• Potential for investor backlash in lead up to 2013

•Earnings revisions by analysts and management•Recent recalls / FDA limitations / potential litigation•Slower overseas adoption of products than anticipated

Prev Close: 52.641y Target Est:

58.76

52wk Range:

45.44 - 57.15

Avg Vol (3m):

1,990,200

Market Cap:

20.06B

P/E (ttm): 14.15EPS (ttm): 3.73Div & Yield: 0.85

(1.60%)Forward P/E:

12.24

Investment Information

1 Year Price Graph

~$600 gain

Analyst revisions

Sales estimates EPS estimates

Stryker CEO Kevin Lobo: “We expect market conditions to remain challenging in Europe...”

Rejuvenate hip implant recall / potential litigation

Wingspan stint for ischemic stroke recommended by the FDA only patients with no other options

Better opportunities in healthcare

•Healthcare indices have rallied this year, with only modest gains by SYK

•Starting in 2013, the Affordable Care Act mandates a 2.9% tax on all revenue related to medical devices

•Volatility associated with the election

•Potential for investor backlash in lead up to 2013

Management shuffle

Kevin Lobo named CEO on Oct. 1Currently no CFO, but former CFO

Dean Bergy remains an advisor Potential difficulties transitioning to new

management

• Stryker manufactures medical technologies.

• Original thesis: Stryker is a leading medical technology manufacturer with potential for expansion

• Rationale for sale

•Management shuffle

•Disappointing results

•Recalls, FDA notices, potential litigation

• Regulatory concerns make medical devices less appealing