OSTE analyst comments: BancBoston Robertson Stephens senior medical device and medical technology
analyst Wade H. King, M.D., today reiterated his Buy rating on Osteotech, Inc.
(Nasdaq: OSTE). The company, headquartered in Eatontown, N.J., is a leading
processor of cadaveric allograft bone for use in bone grafting procedures.
"We are reiterating our Buy rating on Osteotech, following the company's
announcement that it will acquire Versalok(R) Low Back Fixation System from
Wright Medical Technology for $600,000, plus the cost of inventory," said
King. "Following the announcement, certain uniformed investors have
circulated comments that the transaction will have a negative impact on
Osteotech's second quarter 1999 earnings. We believe that this view is
completely erroneous, as the acquisition has been capitalized, effecting the
company's balance sheet only.
"In our opinion, the recent weakness in Osteotech shares represents a
compelling investment opportunity," said King. "We remain confident that the
company will meet our second quarter earnings per share estimate of $0.23. In
addition, we look for shares of Osteotech to trade to at least 30 times our
2000 earnings per share estimate of $1.35, yielding a price target of $42. If
we apply a multiple consistent with the company's 35 percent bottom-line
growth rate to our earnings per share expectations, this yields a price target
of $50." |
