Guidance of 8.3%, 9.3% organic growth and $15 adjusted EPS is the 2026 floor. Nineteen times next year’s $17 of earnings puts the shares at $323, a buy from $277.
Key points
- 8.8% organic sales growth is the 2026 midpoint after the cyber pause; H2 needs about 11% to hit it.
- $15.02 is the 2026 adjusted EPS midpoint; GAAP LTM EPS is only $9.65 because of charges.
- 19 times 2027 adjusted EPS of $17.00 produces a $323 target, 17% above $277.
The call
The $277 price treats 2026 as a $15 earnings year at 18.4 times. That multiple is cheap for a hospital compounder only if production never catches the order book and the CEO change resets growth. Twelve-month implied return at that multiple is a market-like 8%.
I believe 2027 adjusted EPS reaches $17.00 as beds, Mako, and vascular backorders ship and mix plus cost programs add another 50 basis points. At 19 times that earnings the stock is $323. The market is too pessimistic: it prices the March cyber hit and Inari plant as structural, not a catch-up year.
Revenue ($ billions)SEC filings through Q2 2026; 2026E–2027E are the desk’s forecasts
Valuation
| Item | Figure |
|---|
| 2026 organic sales growth (mid) | 8.8% |
| 2026 adjusted EPS (mid) | $15.02 |
| 2027 adjusted EPS (desk) | $17.00 |
| Multiple on 2027 earnings | 19 times |
| 12-month target | $323 |
Nineteen times is below the 25-plus times paid when growth was unchallenged, but above today’s 18.4 times 2026. Asymmetry is modest: being right is about 17% plus a $3.52 dividend; being wrong on H2 production still leaves a $15 earnings floor near $270.
Quarterly organic-style reported growthYear-over-year reported sales growth from SEC facts, as of June 30 2026
Risks
- Capital backlog does not convert if hospital budgets freeze; watch Q3 bed and Mako shipments on October 29.
- Peripheral vascular share stays with competitors after the Inari disruption; watch U.S. Vascular organic growth.
- Spencer Stiles as CEO slows M&A or robotics cadence; watch February 2027 equity mix and first-quarter language.
What would change my mind
Organic sales growth below 8% for full-year 2026, or a cut to 2027 margin plans on the October 29 call.