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Biotech / Medical : Arterial Vascular Engineering AVEI -- Ignore unavailable to you. Want to Upgrade?

To: Intel Trader who wrote (242)	6/23/1998 4:33:00 PM
From: gbh	Read Replies (2) \| Respond to of 410

Pretty good prediction. Got there quicker than I expected though.

To: Intel Trader who wrote (242)	6/27/1998 1:39:00 AM
From: Tim Bagwell	Read Replies (1) \| Respond to of 410

IT, Looks like you were right about the double bottom holding. AVEI is showing some strength lately.

To: Intel Trader who wrote (242)	6/29/1998 9:49:00 AM
From: Jeffrey L. Henken	Read Replies (1) \| Respond to of 410

J&J May Be on the Prowl For a Medical-Device Firm By RON WINSLOW and LESLIE SCISM Staff Reporters of THE WALL STREET JOURNAL Just a few quarters ago, Johnson & Johnson's coronary stent was one of the healthiest products in medicine. But competitors have suddenly seized the market for such medical devices, and now investors wonder whether the once vaunted J&J line still has a pulse. That is at the heart of Wall Street speculation that has the big health-care company shopping the medical-device sector for life support for its cardiology business. Although such rumors sent shares of heart-device makers Guidant and Medtronic 7% and 5.4% higher, respectively, on Wednesday, some analysts figure those companies pose price and other thorny barriers for J&J. Those stocks have since eased a bit. These analysts believe much smaller Arterial Vascular Engineering and St. Jude Medical are more logical targets. AVE rose 1 7/8 Friday to 34 5/8. With a new competitor, Boston Scientific, poised to enter the stent fray, some analysts think prices for the tiny metal scaffolds that prop open coronary arteries may finally come under pressure in the U.S., making a deal for a company like stent-maker AVE risky in the short term. That's why some Wall Street observers are skeptical that a J&J move is imminent, and think the company may remain on the sidelines, perhaps until the fall when the impact of the new entrant may be clearer. Still, the consensus view is the company can't wait for long. "J&J sorely needs to rev up its professional-products segment," says NationsBanc Montgomery Securities analyst Kurt Kruger. Plummeting stent sales contributed to a 2% first-quarter decline in revenue in the company's professional lines. Mr. Kruger estimates annualized stent sales now at about $140 million, down from nearly $700 million in 1996. That saddles J&J with "midsingle-digit growth," he adds. "That's pretty anemic." J&J, which had by far the dominant coronary stent on the U.S. market until last fall, didn't have any comment on the market speculation. It has already gone the acquisition route once to shore up the business with its $1.8 billion hostile takeover of Cordis in early 1996. But Guidant and AVE have trumped J&J's entry with stents that are more flexible and easier to implant. J&J was also vulnerable because of its own marketing strategy: It angered cardiologists by holding firm on its price of about $1,500 a stent, even for customers that do high numbers of procedures. "Their current technology is very much threatened" by the new generation products coming on the market, says Eric Topol, chairman of cardiology at the Cleveland Clinic. "And they are dealing with a backlash from when they had a monopoly and were very tough to deal with [on pricing], even in large-volume labs like ours." AVE impresses some analysts as a good prospect for J&J because its stent is quickly gaining acceptance among cardiologists. Moreover, with a stock-market value of $2.19 billion, AVE would be a manageable bite for J&J -- especially if looming price competition prompts investors to sell off the stock in the interim. But AVE may not be a willing target. "AVE wants to make a go of it on their own," says Sharon di Stefano, analyst at Josephthal & Co. She says the company is on an acquisition hunt of its own, perhaps for Bard's cardiovascular line, to bolster its stent. St. Jude offers J&J the prospect of broadening its cardiovascular portfolio. It concentrates on heart valves and defibrillators used to treat heart-rhythm disorders, areas where J&J doesn't have any offerings. With a current market value of $3.29 billion, it would also be much more affordable than Medtronics or Guidant. St. Jude "has struggled in terms of execution," but has an attractive product lineup, argues Arch C. Smith, analyst at Piper Jaffray. Guidant, with a strong product line in both interventional cardiology and pacemakers and defibrillators, could make the best strategic fit for J&J, suggests Jonathan Osgood of BT Alex. Brown. But he and other analysts note that overlap with the stent-related business would raise antitrust concerns. And with a current market value of $10 billion, it may exceed J&J's parameters. Noting that the company is evenly split between drugs, consumer products and devices, Charlene Lu of Prudential says, "The company doesn't want to look lopsided." That leaves Medtronic. At nearly $30 billion, a J&J bid most likely would be too dilutive to earnings. More likely, analysts say, J&J may team with Medtronic on marketing ventures. Indeed, one may be in the works for a hospital group purchasing organization.