Sector Snap: Medical device makers in 2011

Sector Snap: Medical device makers in 2011

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NEW YORK (AP) — A William Blair & Co. analyst said Monday that 2011 will be a difficult year for medical device makers, but he predicted it will be a better year than 2010.

Analyst Matthew O’Brien said revenue growth will increase because spinal procedure volumes will bounce back and demand for procedures on the extremities will stay strong. However he said the companies will face more pressure to reduce prices, which will particularly hurt revenue from hip and knee implants. He also thinks stricter regulatory scrutiny will lead to fewer introductions of newer products.

O’Brien maintained a rating of “Outperform” on Stryker Corp., and rates ArthroCare Corp., NuVasive Inc., Symmetry Medical Inc., Wright Medical Group Inc. and Zimmer Holdings Inc. at “Market Perform.” He said Stryker has a diversified range of products, including different types of orthopedic implants as well as surgical equipment.

The markets moved higher on the first trading day of 2011. Shares of spinal device maker NuVasive rose $1.01, or 3.9 percent, to $26.66. Shares of Wright Medical rose 64 cents, or 4.1 percent, to $16.17. Stryker shares added 95 cents to $54.65 and shares of ArthroCare lost 6 cents to $31.

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