Sector Snap: Orthopedic device makers
NEW YORK -- Shares of orthopedic implant makers mostly traded higher Thursday, but analysts said industry bellwether Biomet's earnings are cause for concern.
Privately held Biomet reported quarterly results Wednesday morning. The company said worldwide sales grew 6 percent, but revenue from hip and knee implants fell 1 percent. Other products did better. Sales of products for spine and bone treatments rose 4 percent, and revenue from sports, extremities and trauma products climbed higher.
Mizuho Securities analyst Michael Matson said Wednesday that Biomet's overall growth slowed, and revenue from joint reconstruction products "slowed sharply" while growth in extremities product sales also decreased.
"We think investors will view Biomet's results as negative for our orthopedics companies particularly given disappointing third-quarter preannouncements from other med tech companies," Matson wrote.
Oppenheimer analyst Steven Lichtman said Thursday that Biomet's weakness came from lower sales volumes, not lower prices. He added that the company's European revenue was stable, and U.S. sales fell. He said Biomet has been reporting stronger growth than its competitors in recent quarters, and it is not clear if its growth slowed or the overall market for orthopedic implants weakened.
Lichtman said he thinks the stocks won't trade higher until next week, when companies start reporting earnings. Johnson & Johnson will post its quarterly results Tuesday morning and Stryker Corp. will report third-quarter results after the market closes on Wednesday.
William Blair & Co. analyst Matthew O'Brien thinks the hip and knee implant markets will stay weak for the rest of the year and into 2013.
In afternoon trading, Stryker shares rose 29 cents to $52.51 and shares of Medtronic Inc., the world's largest medical device company, added 30 cents at $42.85. Wright Medical Group Inc. lost 32 cents to $21.37 and Orthofix International NV stock lost 10 cents to $42.77. Shares of NuVasive Inc. picked up 13 cents to $14.48. NuVasive shares are down 36.6 percent since the company issued a disappointing third-quarter outlook on Oct. 3. Zimmer Holdings Inc. shares rose 34 cents to $62.95. Zimmer stock is down 6.3 percent since Monday's close.