(Reuters) - Demand for implantable heart defibrillators
could slow further before improving, medical technology
analysts said, prompting several this week to scale back
their financial outlooks for makers of the devices.
Boston Scientific Corp.'s recall in late June of
defibrillators and pacemakers made by its Guidant unit may
have caused more disruption in the market than previously
thought, Goldman Sachs analyst Lawrence Keusch said on
Guidant recalled more than 100,000 devices last year. Last
month, when Boston Scientific announced the latest recall,
affecting about 50,000 devices, it said it could take 18
to 24 months to fix systemic problems in the business and
said more recalls were likely. "We now believe that it is
prudent to assume that market growth acceleration could be
more tempered," Keusch, who maintained "buy" ratings on
Boston Scientific and rival Medtronic Inc., wrote in a
note to clients.
St. Jude Medical Inc. also makes implantable cardioverter
defibrillators, which shock racing hearts back to normal
rhythm. Keusch lowered his outlook for second-quarter
growth in the defibrillator market to 1 percent from 3
percent and trimmed his estimates for full-year earnings
for the three companies, noting physicians and patients
continue to weigh concerns about device reliability.
Prudential Financial analyst Lawrence Biegelsen lowered
his price target for St. Jude shares to $31, citing a
reduced growth forecast for the ICD market. He kept a
"neutral" rating on the stock.
JP Morgan analyst Mike Weinstein, who forecasts ICD market
growth of 3 percent in the second quarter, expects St.
Jude to take market share due to new product launches,
sales force expansion and Guidant's continued troubles.
But he said overall industry demand remains sluggish."Our
checks thus far uncovered few signs of a market recovery,
which we continue to believe may take several quarters to
play out," Weinstein wrote.
BMO Capital Markets analyst Joanne Wuensch lowered her
earnings forecasts and price target for Boston Scientific
shares, saying the latest recall makes an ICD market
recovery less likely in the second half of the year.
Shares of Boston Scientific, which closed near four-year
lows Thursday at $15.98, are down more than 12 percent
since the June 26 recall. St. Jude has fallen less than 1
percent in that time, to $32.73. Medtronic is off 2
percent, at $47.50.