Monday, March 28, 2005

one of the most loved

sectors over the past decade has been the orthopedic device makers (SYK, ZMH, SNN, WMGI). Investors and analysts recognize the volume gains (baby boomers), price/mix benefits and oligopolistic nature of the industry and have pushed the stocks of these firms up to pretty lofty levels. I just read a note from Prudential that urges caution with respect to these stocks. The firm feels that high single digit volume gains should persist in the U.S. but that we might start to see signs of deceleration in price & mix. They note that "mix" is not always a benefit to these companies. For example, patients could easily move away from Ceramic on Ceramic hips to hips of comparable quality that cost 1/2 the price.

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