Shares of Medical Device Makers Advance
Friday January 6, 1:02 pm ET
Shares of Medical Instruments, Supplies Companies Advance on Host of Bullish Reports
NEW YORK (AP) -- Manufacturers of medical instruments and supplies traded higher Friday after a number of investment houses issued bullish reports on companies including Arrow International Inc. and FoxHollow Technologies Inc.
On Thursday after the market close, Arrow International reported first-quarter earnings fell 11 percent to $11.8 million, or 26 cents per share -- 2 pennies short of analysts' consensus forecast, according to Thomson Financial. Revenue edged up less than 1 percent to $113.6 million from a year ago.
Still, an analyst with Brean Murray Carret & Co. said he believes "the bad news is behind it." New manufacturing plants should alleviate the company's capacity constraints, and management expects its core business sales to grow by 10 percent to 12 percent annually, said analyst Arnold Kaufman.
He upgraded the Arrow shares to "Accumulate" from "Hold" and set a target price of $33. The stock jumped $2.39, or 8.3 percent, to $31.25 in midday trading on the Nasdaq. Reading, Pa.-based Arrow makes cardiac diagnostic products such as disposable catheters.
Piper Jaffray upgraded FoxHollow Technologies to "Outperform" from "Market Perform" in the wake of a sharp drop in the company's share price. The medical device manufacturer's stock has slid 33 percent since the surprise resignation of the company's chief executive in mid-December. FoxHollow hasn't reaffirmed its 2006 guidance, leaving investors jittery.
"There is a strong feeling of another shoe to drop," said Piper Jaffray analyst Thomas J. Gunderson. But the analyst said in a bullish note to clients that his research indicates FoxHollow's market "appears as robust going into 2006 as it was in 2005."
FoxHollow's devices are used to treat peripheral artery disease, a condition caused by plaque buildup, which increases the risk of heart attacks and strokes.
He lowered his 2006 revenue forecast to $220 million, however, noting that aggressive additions to the company's sales force may slow. FoxHollow in October forecast 2006 revenue between $230 million and $250 million. The company's Nasdaq-listed shares advanced $4.54, or 15.1 percent, to $34.66.
Gunderson also lifted St. Jude Medical Inc. to "Outperform" from "Market Perform" and boosted the stock's target price to $60 from $49. He noted the company's potential to increase its share of the market for its implantable cardioverter defibrillators, a device used to regulate heart rhythm. Shares of St. Jude rose $2.10, or 4.2 percent, to $52.64 on the New York Stock Exchange.
Elsewhere in the industry, Harris Nesbitt upped its rating on Boston Scientific Corp. to "Outperform," or "Buy," from "Neutral." The stock added 32 cents to $26.19 on the New York Stock Exchange.
KeyBanc Capital Markets raised its price target on AngioDynamics Inc. to $40 from $33, sending the company's shares up $2.20, or 9.1 percent, to $26.39 on the Nasdaq.
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