A Robert W. Baird and Co. analyst on Monday predicted a strong year for shares of four medical device makers, saying that in 2010, investors may be more willing to take a risk on companies in high-growth fields.
Analyst Lawrence Neibor upgraded shares of Cyberonics Inc., Edwards Lifesciences Corp., Thoratec Inc., and Volcano Corp. to "Outperform" from "Neutral."
He downgraded Boston Scientific Corp., one of the largest companies in the industry, to "Neutral" from "Outperform" because most of its revenue comes from sales of drug-coated stents and cardiac rhythm products, two markets he said are well developed and not growing very fast.
Neibor reduced his price target to $10 per share from $13, but investors shrugged off the report, bidding up Boston Scientific stock 8 cents to $9.08.
Neibor expects better results for companies that are in faster growing areas, launching new products or expecting significant product approvals or study results.
Volcano shares made the largest gains, advancing $1.40, or 8.1 percent, to $18.78, after touching a 52-week high of $19. Neibor said clinical trial data should lead to better sales of its intravascular ultrasound products, which are used to diagnose and treat vascular and heart conditions, and fractional flow reserve devices, which are wires placed inside blood vessels to analyze blood flow and pressure. He raised his price target to $23 per share from $17.
Neibor said Thoratec will get $50 million to $70 million in additional sales if regulators approve the use of its HeartMate II pump in patients with end-stage heart failure. He raised his price target to $38 per share from $32, and the stock added 84 cents, or 3.1 percent, to $27.76.
The analyst raised his estimate on Edwards shares to $103 from $83, saying its Sapien XT heart valve will gain new approvals in 2010 and 2011, giving the company a stronger market position. He said new product launches and sales of replacement devices will help Cyberonics, and raised his target on the company to $25 from $17.
Edwards stock rose 64 cents to $87.49, while Cyberonics shares picked up 36 cents to $20.80.