The orthopedic utilization market is showing improved growth worldwide and certainly in the U.S., and names most levered to the recovery in this segment of medical devices are favored, says Matt Miksic, a Managing Director and Senior Research Analyst at Piper Jaffray & Co.
“We’ve been making a call, since January, across a couple of segments of our universe, that surgical trends and procedure trends are improving in the U.S., after approximately four years of going sideways or declining due primarily to the U.S. recession. That call crosses over probably half a dozen stocks in orthopedics, sports medicine and spine,” he said.
Miksic recommends Zimmer Holdings, Inc. (ZMH), an orthopedics company. He says, in terms of stock performance, the company is set to benefit proportionally as its market improves, and Zimmer came in roughly in line with earnings expectations.
“The names most levered to the recovery in orthopedics utilization are Zimmer on the large-cap side,” Miksic said. “Zimmer is 85% exposed to hips and knees, so when that moves, they have an awful lot of leverage to that market.”
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