CHICAGO (Reuters) – If U.S. medical device makers had one message they want to deliver to investors these days, it would be that their products are not commodities and are not facing significant price pressures.
Historically a safe haven during recessions, shares of companies that make heart devices and orthopedic implants have been under a dark cloud in recent months amid concerns of price pressure resulting from a weak hospital sector and probable U.S. healthcare reform.
The recession has already taken its toll as more people lose employer-provided insurance and put off medical procedures. Concerns of looming price pressure on medical devices have kept investors at bay, even with price-earnings ratios of top manufacturers holding near their lowest levels in about two decades.
“These stocks are pretty fairly valued right now because of concerns around pricing,” said Raj Denhoy, director of equity research at Thomas Weisel Partners. “These concerns are not misplaced.”