We maintain our Neutral recommendation on
Wright Medical Group
). Its first quarter earnings beat the Zacks Consensus Estimate.
The company reported a modest profit in the quarter, hit by
Net sales for the quarter were $126.7 million, down 6% year over
year in reported and constant currency terms, beating the Zacks
The company restated its segments to broadly comprise
Extremities and OrthoRecon. OrthoRecon comprises Hips, Knees and
Other. The Extremities segment is composed of Foot and Ankle, Upper
Extremity, Biologics and Other product lines.
OrthoRecon formed 58% of sales in the reported quarter with Hips
contributing 33%, and Knees 25%. Extremities constituted 42% of
revenues with Foot and Ankle contributing 23%, Upper Extremity 5%
and Biologics 12%.
OrthoRecon sales dropped 8% year over year in constant currency
in the first quarter. Among its components, Hips fell 10% while
Knees dropped 5%.
Sales of Extremities segment declined 4% year over year in
constant currency in the first quarter. Among its constituents,
Foot and Ankle rose 11%, Upper Extremity was down 13% while
Biologics moved down 21%.
Wright's focus on niche technologies lends some support amid
economic cyclicality. Moving forward, revenue growth will be
supported by new product launches. Moreover, new deals in
extremities are expected to bolster growth in this segment. The
company's restructuring initiatives should also boost future
Our views on the company are moderated by intense competition
from larger players and pricing pressure. Wright Medical
competes with much bigger names such as
Smith & Nephew
). Moreover, the company remains exposed to procedure volume
SMITH & NEPHEW (SNN): Free Stock Analysis
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