Tuesday, September 25, 2012

The One Orthopedic Stock to Own for 2013


Brean Murray says Zimmer Holdings shares have upside based on the pipeline.

Brean Murray, Carret & Co.

We are initiating coverage of key names in the orthopedic group, with a generally favorable view. Our thesis is predicated on several assumptions: 1) the market has absorbed the "new norm" on pricing -- down 2%-3% for hips and knees; 2) volumes (low-single digits) are stabilizing, but continued improvements in uninsured rates create upside opportunities for stocks; and 3) mix remains the swing factor, and still the least appreciated by investors.

Our contention on mix is that the absence of compelling new products, combined with impact of metal-on-metal hip recalls (which was a negative-mix driver.......subscription article

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