Symmetry Medical downgraded
Shares of Symmetry Medical Inc. (NYSE:SMA) closed in negative territory on news before the opening that the maker of orthopedic equipment was downgraded to “Market Perform” from “Outperform” by brokerage house Wachovia Capital Markets, LLC.
“We are concerned that Symmetry Medical may guide below the consensus EPS estimate [of $0.94 per share] when it issues 2008 guidance,” wrote senior analyst Michael Matson in a research note published today.
The Warsaw, Ind.-based company, which has not issued earnings guidance for the full year 2008, announced on Feb. 14 that it projects revenue between $350 million and $360 million. The consensus on Wall Street is for revenue of $359.67 million.
“We continue to be encouraged by the overall strength of the orthopedic markets and the uptake in orders across our global network,” said president and CEO Brian Moore in a statement. “We believe that we are well positioned to meet any increased demand from our orthopedic customers, confirming our decision to sustain capacity during periods of slower industry growth.”
“We are concerned that consensus estimates may be based on optimistic gross margin assumptions,” Matson wrote. “While Symmetry Medical’s ‘core’ capacity utilization (excluding acquisitions) is currently at 70-75%, overall capacity utilization is likely significantly lower.”
Matson lowered his 2008 earnings estimate to $0.92 per share from $0.95 per share, and his 2009 earnings estimate to $1.08 per share from $1.15 per share.
Nevertheless, the analyst wrote that Symmetry Medical “is positioned to continue gaining share in the medical device supplier market as it capitalizes on outsourcing and vendor consolidation trends.”
At close, Symmetry Medical’s (SMA) stock was down $0.54, or 3%, to $18.61. The 52-week low of $14.14 was established on Aug. 7, 2007, while the 52-week high of $19.22 was reached on March 20.
