Orthopedics This Week

RRY Publications Orthopedic Decisions Start Here

March 9th, 2010

Weekly News, Analysis, and Commentary

Winner of the MORE Award for Journalistic Excellence in Orthopedics

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This Week: The big news this past week was NuVasive’s trifecta—largest sales increase of any major spinal implant company, largest single-day increase of any orthopedic stock this year and, finally, unequivocal support from two the major private insurers. A bit rich for Power Rankings but top quality is always expensive.
Rank	Last Week	Company	TTM Op Margin	30-Day Change	Comment
1	4	Orthofix	11.00%	14.09%	Five consecutive quarters of rising cash flows and yet OFIX is trading at only 1x PSR. The pattern of upside surprises is getting routine.
2	3	Smith & Nephew	19.17	1.18	SNN wins suit against Arthrex for patent infringement—4th lowest future P/E.
3	5	Medtronic	31.37	-0.82	Spine disappointed, for sure, but at 13x trailing earnings, the bad news is baked in.
4	10	Exactech	12.61	16.88	Two Gainesville companies led all ortho stocks in price appreciation last month. Only EXAC has the fundamentals to be on Power Rankings.
5	1	Johnson & Johnson	27.1	1.11	Attractive new opportunities pushed JNJ down to #5. JNJ is still the dividend yield play—for widows, orphans and nervous investors.
6	6	Integra LifeSciences	15.37	-1.36	Classic. There’s always money to be made when earnings grow faster than sales, which Stu is doing right now at IART.
7	2	Symmetry	11.48	-6.52	Terrible report for 4Q and 2009. Only reason SMA is still on Power Rankings is because they are so darn cheap.
8	7	Stryker	24.71	-2.68	Not particularly cheap, given its new lower earnings growth rate, but if sales can grow at double-digit rates this year then…
9	8	Zimmer	27.71	-5.49	Consensus of analysts is that ZMH can grow sales around 6% annually—which is lower than SYK, SNN and Synthes.
10	9	CONMED	7.74	0.23	Decent 4Q report and analysts are forecasting some pretty nice numbers for 1Q. The market isn’t showing confidence, however.

Top Performers Last 30 Days
	Company	Symbol	Price	Mkt Cap	30-Day Chg
1	NuVasive	NUVA	$40.00	$1,530	33.3%
2	Capstone Therapeutics	CAPS	$1.04	$42	23.8%
3	RTI Biologics Inc	RTIX	$3.75	$205	18.3%
4	Exactech	EXAC	$19.39	$249	16.9%
5	Orthofix	OFIX	$34.09	$584	14.1%
6	CryoLife	CRY	$7.05	$201	13.5%
7	Osteotech	OSTE	$3.89	$70	13.4%
8	Alphatec Holdings	ATEC	$5.13	$270	11.5%
9	Orthovita	VITA	$3.84	$294	8.8%
10	Mako Surgical	MAKO	$13.21	$439	5.6%

Worst Performers Last 30 Days
	Company	Symbol	Price	Mkt Cap	30-Day Chg
1	TiGenix	TIG.BR	$4.72	$116	-14.4%
2	Kensey Nash	KNSY	$22.07	$241	-12.9%
3	Synthes	SYST.VX	$118.16	$14,023	-12.2%
4	Wright Medical	WMGI	$16.85	$631	-6.7%
5	Symmetry Medical	SMA	$8.60	$308	-6.5%
6	Zimmer Holdings	ZMH	$57.33	$12,040	-5.5%
7	Stryker	SYK	$53.10	$21,120	-2.7%
8	Integra LifeSciences	IART	$39.80	$1,130	-1.4%
9	Medtronic	MDT	$43.40	$47,940	-0.8%
10	Average			$11,431	-0.4%

Lowest Price / Earnings Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	P/E
1	Kensey Nash	KNSY	$22.07	$241	12.52
2	Medtronic	MDT	$43.40	$47,940	13.39
3	Symmetry Medical	SMA	$8.60	$308	13.45
4	Johnson & Johnson	JNJ	$63.00	$173,820	13.61
5	Average			$11,431	14.03

Highest Price / Earnings Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	P/E
1	Smith & Nephew	SNN	$51.47	$9,120	78.54
2	RTI Biologics Inc	RTIX	$3.75	$205	42.44
3	NuVasive	NUVA	$40.00	$1,530	38.45
4	ArthroCare	ARTC	$26.57	$712	23.38
5	CONMED	CNMD	$21.88	$637	22.00

Lowest P/E to Growth Ratio (Earnings Estimates)
	Company	Symbol	Price	Mkt Cap	PEG
1	Alphatec Holdings	ATEC	$5.13	$270	0.70
2	CryoLife	CRY	$7.05	$201	0.77
3	Medtronic	MDT	$43.40	$47,940	1.27
4	Exactech	EXAC	$19.39	$249	1.28
5	Smith & Nephew	SNN	$51.47	$9,120	1.30

Highest P/E to Growth Ratio (Earnings Estimates)
	Company	Symbol	Price	Mkt Cap	PEG
1	CONMED	CNMD	$21.88	$637	8.97
2	Johnson & Johnson	JNJ	$63.00	$173,820	1.84
3	Average			$11,431	1.67
4	Wright Medical	WMGI	$16.85	$631	1.47
5	Zimmer Holdings	ZMH	$57.33	$12,040	1.46

Lowest Price to Sales Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	PSR
1	Osteotech	OSTE	$3.89	$70	0.72
2	Symmetry Medical	SMA	$8.60	$308	0.79
3	CONMED	CNMD	$21.88	$637	0.92
4	Orthofix	OFIX	$34.09	$584	1.07
5	RTI Biologics Inc	RTIX	$3.75	$205	1.18

Highest Price to Sales Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	PSR
1	TiGenix	TIG.BR	$4.72	$116	162.33
2	Mako Surgical	MAKO	$13.21	$439	16.71
3	Synthes	SYST.VX	$118.16	$14,023	4.13
4	NuVasive	NUVA	$40.00	$1,530	3.36
5	Orthovita	VITA	$3.84	$294	3.27