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Microcap & Penny Stocks : AMERICAN BIOMED, Minimally Invasive Technology (ABMI) -- Ignore unavailable to you. Want to Upgrade?

To: Mark S. who wrote (1094)	6/3/1998 12:13:00 PM
From: greg Benfield	Respond to of 2887

You are right again...but that is why they are much more than .60. But hey that does mean we will not reach our modest goals. We are not claiming we will catch up to them. Just that our little company might find its niche. I think we agree on the information out there...but what is one man's treasure is another's trash. But you are honest. And your posts will help keep people that will sell on weakness away from our stock. Thank you.

To: Mark S. who wrote (1094)	6/3/1998 12:20:00 PM
From: Jeffrey L. Henken	Read Replies (1) \| Respond to of 2887

Arterial Vascular: Victim of Its Own Success? fnews.yahoo.com 1998 is shaping up to be a banner year for medical device maker Arterial Vascular Engineering (Nasdaq:AVEI - news) . The U.S. launch of its coronary stent was a stunning success and its earnings report in April blew away expectations. The stock was having quite a run, too, soaring from $7.50 last April to over $45 in March. But it has rolled over sharply in the past two months, currently at $29. Could Arterial Vascular be a victim of its own success? Coronary stents are tiny mesh tubes made of stainless steel used by heart surgeons to prop open the weak inner walls of diseased arteries. They are often used in conjunction with balloon angioplasty to prevent restinosis (the re-narrowing of artery walls) after the clogged arteries are treated. Stents are one of the hottest new medical devices in years, and they carry hefty profit margins. The aging population and longer lifespans promise a robust market for such products as far as the eye can see. The basic concern behind the falling stock price seems to be this: Arterial Vascular Engineering (AVE) is having such a phenomenal 1998 that it will make year-over-year comparisons very tough in 1999. Instead of a gradual ramp-up in sales upon their U.S. launch, AVE's stents burst onto the scene this year and quickly captured a over 30% of the market. But even if AVE maintains that market share, it will be tough to sustain its amazing profit margins as competition heats up. In its latest quarterly results (fiscal third quarter, March 1998) Arterial Vascular reported gross profit margins of 80.5% and operating margins of 47.3%. Revenues soared to $141 million from $20 million in the year ago quarter, thanks to the U.S. launch. European sales were up nicely to $25 million, but it was the $106 million in U.S. sales that really caused revenues to balloon. Earnings per share came in at $0.64 for the quarter, blowing away the consensus estimate of $0.42. But the fast-growing coronary stent market is highly competitive, populated with heavyweight competitors like Johnson & Johnson (NYSE:JNJ - news) and Guidant (NYSE:GDT - news) . Furthermore, Boston Scientific (NYSE:BSX - news) is expected to hit the market with a new stent in the next month or two. This competition is expected by many to pressure margins. Throw in a healthy dose of short-sellers (speculators who sell borrowed stock on the bet that its price will fall) and its easy to see how the stock went from fast-rising to fast-fading. As of mid-May short interest stood at 5.5 million shares, amounting to 24% of float (float means shares of AVEI available for trading, i.e. not owned by insiders). But short interest was down 11% from the prior month, so perhaps the short-sellers have taken their pound of flesh and will soon cover, which means buying back their shares. If and when that happens, it usually puts upward pressure on the stock price. Meanwhile, some contend that pricing pressures in the stent market won't be as severe as critics make it out to be. An article in Barron's this week quoted one analyst predicting a sharp drop in stent prices, so Guidant CEO Ronald Dollens responded in a Reuters interview Monday by saying "I don't think there's really any strong basis to assume there's going to be any kind of substantial price erosion," adding "the stent market continues to grow and the prices we feel, specifically in the U.S., are holding." Some analysts agree that prices will hold up reasonably well in the U.S. for the next few quarters, and note that Arterial Vascular has a strong pipeline of next-generation stents to hit the market later this year and next. The medical technology field is renowned for short product cycles, so its vital for companies to have productive R&D to ensure a regular stream of the latest and greatest gizmos. Arterial Vascular added to the breadth of its pipeline recently by acquiring World Medical, which is developing grafts for abdominal aortic aneurysms (AAA). The worldwide market for AAA devices is estimated at about $400 million and growing quickly. World Medical already sells its first generation graft in Europe, and FDA approval is expected in 2000 for the U.S. market. Because of the exceptional U.S. launch of AVE's first stent, analysts have dramatically raised their earnings estimates for the current fiscal year (FY98 ending in June) to a consensus of $1.43 per share now from a consensus of $0.94 three months ago. They also raised FY99 estimates to $2.15 from $1.56 two months ago, but there is considerable uncertainty surrounding those estimates now due to the threat of competition and pricing pressures. Even the more bullish analysts believe Arterial Vascular's valuation should be discounted in anticipation of difficult year-over-year comparisons in Fiscal and Calendar Year 1999. But with the stock down 36% since March, it is now trading at just 13.5 times FY99 estimates. For a company that's expected to average 30% growth over the long-term, and that is racking up 300%+ growth this year, that's quite a discount. The near-term for AVE's stock will probably be dictated by a battle between the short-sellers and longer-term supporters, and it could very well be the case that stronger immediate results from the company have a perversely negative effect on the stock because that creates tougher year-over-year comparisons. Overall, though, Arterial Vascular Engineering has proven itself as a major player in the fast-growing coronary stent market, and as long as it can harvest its pipeline of new devices the company's prosperity appears secure. In order to remain competitive companies like Guidant, Boston Scientific, Johnson and Johnson and Arterial Vascular Engineering. need to be certain that they have a broad portfolio of devices in R&D which they can bring to market as quickly as possible. Can anyone name some areas where the acquisition of ABMI could improve the product lines of these companies? I can and I think all these companies could do so as well. American BioMed is very much an attractive acquisition target. Whether that happens or not certainly has nothing to do with my thoughts. But saying it could happen is neither hype nor insider information. Regards, Jeff