Wright Medical Adds Fuel to the Fire
BY JOHN CHOPACK, OCTOBER 5, 2005
Wright Medical announced its preliminary 3Q:05 financial results; revenues are anticipated to be $4 million lower than its previous guidance and earnings will range between $0.10 and $0.11 which well below analyst expectations of $0.17. Wright blamed its domestic biologics division, which declined by 10% during the quarter, for its poor performance during the 3Q:05. However, hips, knees and extremities all performed well increasing by 15%, 13%, and 14%, respectively.
Wright's announcements follows a couple other negative financial reports. It started when Smith & Nephew announced that it was lowering its guidance for 2005. Then Biomet announced its 1Q:05 (May fiscal year) earnings totaled $0.40 which a $0.01 below analyst expectations.
The recent announcement from Wright is equivalent of throwing gasoline on a fire quickly getting out of control. Although many analysts feel that sell off of orthopedic stocks is overblown, they haven't convinced the bulls to enter at these levels. We look forward to Stryker's financial report on October 18 and hope it controls the blaze.
