We recently reiterated our ‘Neutral’ recommendation on Wright Medical Group, Inc. (WMGI) with a target price of $17.50 based on a P/E of 25.4 our fiscal 2010 EPS estimate of 69 cents. The company’s fourth quarter and fiscal 2009 results were mixed.
Wright Medical reported fourth quarter earnings per share of 23 cents, surpassing the Zacks Consensus Estimate of 19 cents. However, earnings were lower than the year-ago figure of 26 cents. For fiscal 2009, earnings per share came in at 55 cents, compared to the Zacks Consensus Estimate of 60 cents and 63 cents, a year-ago.
Total revenues in the fourth quarter increased 8.0% year-over-year to $129.9 million, ahead of the company’s guidance of $122 million to $127 million. Excluding a favorable impact of foreign currency translation, net sales increased 5% year over year.
Excluding Biologics products, total revenues increased across all business segments. Hip, Knee, Extremity and Other products increased 7.0%, 5.6%, 21.9%, and 6.8% year-over-year, respectively. Biologics product revenue declined 1.9% year-over-year in the reported quarter.
Hip, Knee and Extremity are Wright Medical’s three largest business segments that contributed 34.5%, 24.2% and 23.3% to total revenues in the fourth quarter of 2009, respectively.
Wright Medical witnessed a contraction in margins in the fourth quarter. Gross margin declined 10 basis points (bps) year-over-year to 70.7%. Operating margin declined by 480 bps year-over-year to 3.5%.
Total revenues in fiscal 2009 increased 4.7% year-over-year to $487.5 million. Excluding Biologics and Other category, growth was registered across all business segments.
Wright Medical is a global orthopedic devices company specializing in the design; manufacture and marketing of reconstructive joint devices and bio-orthopedic materials.
The orthopedic industry is highly competitive, and Wright Medical faces challenges from large players, such as, Zimmer Holdings Inc. (ZMH), Stryker Corp. (SYK), Johnson & Johnson (JNJ)/De Puy, Smith & Nephew Plc. (SNN) and Biomet.
Read the full analyst report on “WMGI”
Read the full analyst report on “ZMH”
Read the full analyst report on “SYK”
Read the full analyst report on “JNJ”
Read the full analyst report on “SNN”
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