Orthopedics This Week

RRY Publications Orthopedic Decisions Start Here

September 6th, 2010

Weekly News, Analysis, and Commentary

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This Week: Orthopedic valuations have fallen so far they have moved beyond cheap to existential. Medtronic, who has been losing spine market share for three years, reported that the decline is accelerating. Alphatec, which is digesting its Scient’x purchase is off 50% to literally pocket change per share. Last time ATEC came down this far, it rebounded like a super ball. The bargains are everywhere in ortho.
Rank	Last Week	Company	TTM Op Margin	30-Day Change	Comment
1	1	Orthofix	13.51%	(5.06%)	OFIX has been #1 longer than any other company. Why? Best cash flow for the $ in all of ortho.
2	3	Kensey Nash	38.72	11.69	Speaking of cash—investors made 12% on KNSY in the last 30 days. This is KNSY’s market.
3	4	Johnson & Johnson	27.1	0.07	You know, business cycles come and go but healthcare is a constant. That and JNJ’s exorbitant dividend yield—3.7%
4	2	Integra LifeSciences	15.37	2.55	Brain catheter recall doesn’t help. But Stu and the team keep beating Street estimates.
5	NR	Alphatec	1.59	(51.25)	CEO Kuyper just bought a slug of stock. At these prices, he likes to own his own company. We agree.
6	6	CONMED	8.76	4.54	This little Utica, New York-based company keeps outperforming the big guys—and posting record profits.
7	7	Smith & Nephew	22.83	(2.07)	Not as beaten down as its Warsaw (Indiana) brethren, SNN has proved to be much less volatile than SYK or ZMH.
8	9	Stryker	24.71	(7.35)	Yes, SYK is clearly oversold and is now the 7th least expensive company in orthopedics.
9	8	Zimmer	27.69	(10.88)	Speaking of existential, the travails of ZMH must remind Dvorak of a Camus novel. Now MDT’s troubles affecting Big Blue.
10	5	Medtronic	32.48	(13.02)	Ok, unexpectedly poor results but, in the trenches, among surgeons MDT is starting to come back. It’ll just take time.

Top Performers Last 30 Days
	Company	Symbol	Price	Mkt Cap	30-Day Chg
1	Osteotech	OSTE	$6.40	$116	80.8%
2	Capstone Therapeutics	CAPS	$0.92	$38	19.5%
3	Kensey Nash	KNSY	$26.57	$259	11.7%
4	TranS1	TSON	$2.49	$52	7.3%
5	CONMED	CNMD	$19.11	$550	4.5%
6	Integra LifeSciences	IART	$36.19	$1,050	2.6%
7	Johnson & Johnson	JNJ	$57.60	$158,660	0.1%
8	Smith & Nephew	SNN	$42.03	$7,470	-2.1%
9	Average			$10,334	-3.5%
10	ArthroCare	ARTC	$25.90	$700	-4.3%

Worst Performers Last 30 Days
	Company	Symbol	Price	Mkt Cap	30-Day Chg
1	Alphatec Holdings	ATEC	$2.14	$187	-51.3%
2	RTI Biologics Inc	RTIX	$2.20	$121	-27.2%
3	Wright Medical	WMGI	$13.71	$538	-14.0%
4	Symmetry Medical	SMA	$9.12	$328	-13.9%
5	Medtronic	MDT	$32.52	$35,220	-13.0%
6	Mako Surgical	MAKO	$10.58	$358	-11.7%
7	Zimmer Holdings	ZMH	$48.01	$9,650	-10.9%
8	Orthovita	VITA	$1.70	$131	-10.5%
9	NuVasive	NUVA	$30.48	$1,200	-10.5%
10	Stryker	SYK	$44.00	$17,470	-7.3%

Lowest Price / Earnings Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	P/E
1	Medtronic	MDT	$32.52	$35,220	9.71
2	Zimmer Holdings	ZMH	$48.01	$9,650	11.43
3	Kensey Nash	KNSY	$26.57	$259	11.83
4	Wright Medical	WMGI	$13.71	$538	12.06
5	Average			$10,334	12.13

Highest Price / Earnings Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	P/E
1	Smith & Nephew	SNN	$42.03	$7,470	57.88
2	Synthes	SYST.VX	$109.73	$13,023	30.67
3	RTI Biologics Inc	RTIX	$2.20	$121	28.77
4	NuVasive	NUVA	$30.48	$1,200	25.04
5	Symmetry Medical	SMA	$9.12	$328	23.82

Lowest P/E to Growth Ratio (Earnings Estimates)
	Company	Symbol	Price	Mkt Cap	PEG
1	NuVasive	NUVA	$30.48	$1,200	0.60
2	Orthofix	OFIX	$28.14	$496	0.61
3	Exactech	EXAC	$15.13	$195	0.70
4	Smith & Nephew	SNN	$42.03	$7,470	1.00
5	Medtronic	MDT	$32.52	$35,220	1.05

Highest P/E to Growth Ratio (Earnings Estimates)
	Company	Symbol	Price	Mkt Cap	PEG
1	CONMED	CNMD	$19.11	$550	14.30
2	Johnson & Johnson	JNJ	$57.60	$158,660	1.90
3	Average			$10,334	1.66
4	Symmetry Medical	SMA	$9.12	$328	1.59
5	Alphatec Holdings	ATEC	$2.14	$187	1.57

Lowest Price to Sales Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	PSR
1	RTI Biologics Inc	RTIX	$2.20	$121	0.73
2	CONMED	CNMD	$19.11	$550	0.76
3	Orthofix	OFIX	$28.14	$496	0.88
4	Symmetry Medical	SMA	$9.12	$328	0.97
5	Exactech	EXAC	$15.13	$195	1.04

Highest Price to Sales Ratio (TTM)
	Company	Symbol	Price	Mkt Cap	PSR
1	TiGenix	TIG.BR	$2.07	$64	228.37
2	Mako Surgical	MAKO	$10.58	$358	10.81
3	Synthes	SYST.VX	$109.73	$13,023	7.22
4	Kensey Nash	KNSY	$26.57	$259	3.26
5	NuVasive	NUVA	$30.48	$1,200	2.79