Barclays on Medical Supplies & Devices: BMET's Call Speaks to Largely Unchanged Ortho Market Dynamics Sequentially
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Barclays on Medical Supplies & Devices: BMET's Call Speaks to Largely Unchanged Ortho Market Dynamics Sequentially
Barclays analyst, Adam Feinstein, says, "Biomet's (Nasdaq: BMET) call largely spoke to continued challenges in the ortho recon and spine markets (it appears there was little change in market conditions sequentially) and some company-specific issues that likely caused Biomet to underperform relative to its peers. Notably, like-for-like pricing appears to have gotten incrementally worse in hips and knees (for the second quarter in a row), while spine pricing remained stable, declining in the mid-single digits year over year. Given product issues (MOM hips) and a nod to increased competition (partial knees, "traditional" competitors and physician distributors in spine), we think Biomet likely lost share in the quarter to other ortho manufacturers, including Stryker (NYSE: SYK) and Zimmer (NYSE: ZMH). Looking forward, Biomet expects some recon volume improvement in 2HCY11, but largely due to easier comps, not improvements in market dynamics. While Biomet is the first ortho to report, net-net, given the context, we expect the 2Q to look largely similar to the 1Q, with SYK and ZMH taking modest share in a flat recon market and roughly 1% spine market growth with Medtronic (NYSE: MDT) losing some share (-2% growth)."
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Barclays analyst, Adam Feinstein, says, "Biomet's (Nasdaq: BMET) call largely spoke to continued challenges in the ortho recon and spine markets (it appears there was little change in market conditions sequentially) and some company-specific issues that likely caused Biomet to underperform relative to its peers. Notably, like-for-like pricing appears to have gotten incrementally worse in hips and knees (for the second quarter in a row), while spine pricing remained stable, declining in the mid-single digits year over year. Given product issues (MOM hips) and a nod to increased competition (partial knees, "traditional" competitors and physician distributors in spine), we think Biomet likely lost share in the quarter to other ortho manufacturers, including Stryker (NYSE: SYK) and Zimmer (NYSE: ZMH). Looking forward, Biomet expects some recon volume improvement in 2HCY11, but largely due to easier comps, not improvements in market dynamics. While Biomet is the first ortho to report, net-net, given the context, we expect the 2Q to look largely similar to the 1Q, with SYK and ZMH taking modest share in a flat recon market and roughly 1% spine market growth with Medtronic (NYSE: MDT) losing some share (-2% growth)."
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