On Jan 14, we downgraded
), a leader in mechanical circulatory assistance devices, to
Neutral based on growing competition and a more challenging
outlook. The company's third quarter 2012 revenues and earnings
per share beat the Zacks Consensus Estimates.
While past results have often been good, Thoratec faces
growing competition from
). Thoratec's monopoly in the U.S. market, in the case of the
bridge-to-transplant (BTT) indication, has come to an end
following FDA approval, in November 2012, for HeartWare's
Ventricular Assist System as a BTT for patients with end-stage
heart failure. HeartWare has already received CE Mark approval in
Expected market share losses to HeartWare for the BTT
indication will result in a slower growth profile for Thoratec.
The growth rate in the Destination Therapy (DT) market where the
company faces no near-term competition will therefore determine
its prospects in the medium term. Overall, the market may be
broad enough to accommodate several players, assuming clinical
Lack of pipeline visibility and relative lack of milestones
represents a concern. Thoratec's third-generation pump (HeartMate
III) is still in the early stages of development. Its
next-generation device may not be commercially available in the
U.S. for the next couple of years.
The small size of the company may restrict its ability to
raise resources. The absence of strategic alliances may hinder
its ability to develop new products. The unified product line of
the company and its lack of product diversification are related
areas of concern.
While we are non-committal on Thoratec at this time, other
medical device stocks worth a look are
Cantel Medical Corp.
Merit Medical Systems, Inc.
). Both are Zacks Rank #1 (Strong Buy) stocks.
CANTEL MED CORP (CMN): Free Stock Analysis
HEARTWARE INTL (HTWR): Free Stock Analysis
MERIT MEDICAL (MMSI): Free Stock Analysis
THORATEC CORP (THOR): Free Stock Analysis
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