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Stryker Not Worth Chasing: David Peltier, portfolio manager for TheStreet.com Value Investor newsletter, advises against buying shares of medical device maker Stryker at these levels, despite the firm's top-line growth and the overall aging of America.
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PE of 15, and a PEG of 1.06.

Last fall, the fund pounced on Zimmer Holdings (ZMH), a leading maker of orthopedic implants and surgical products, establishing a 1.50% stake, when a perfect storm hit. Management had just announced slowing growth across its portfolio. This had followed the departure of the CEO and CFO, in settling a case that accused the company of having paid surgeons to use its products, and lower-than-expected currency gains from international sales. The result: The stock fell from $77 to $66 in one day. But Sloan felt none of the news altered the company's longer-term outlook. "We were still looking at 33% operating margins, return on invested capital of 16%, and a $1 billion share buyback that's now half realized," says Sloan, "but a 2008 PE of 15 instead of 18, which is where we think it should be." His average cost is $66. The stock was trading at $68 on Friday. And Sloan sees it heading to $85.

Options action suggests Zimmer (ZMH) could trade higher, reveals Jon Najarian. There’s speculation that Johnson and Johnson (JNJ) is looking at buying Zimmer, but it’s only market rumor, he emphasizes.

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Zimmer Holdings (ZHM) was downgraded to Market Weight from Overweight at Thomas Weisel. ZHM is currently in a period of high spending in manufacturing, SAP implementation and spine and trauma network additions sacrificing near term profitability.

Zimmer's shares, knocked down by an industry faux pas, could climb by more than 25%, as demand builds and the company launches innovative products.

Zimmer (ZMH) was downgraded from Outperform to Neutral, Robert Baird said. $74 price target. Durom hip cup issue could have a meaningful, negative effect on the company.

The Warsaw, Indiana-based knee and hip implant maker announced it has approved an additional $1.25 billion stock buyback program. The authorization adds to the remaining capacity under the current repurchase program, which totaled $477 million as of March 31.

The orthopedic-device maker also recently reported profit of $239.3 million, or $1.02 a share -- up just 3% from $233.4 million, or 98 cents a share, in the 2007 period -- and $244.3 million, or $1.04 a share, on an adjusted basis. Sales rose 11% to $1.06 billion, in line with the Thomson Financial consensus target of $1.04 a share on revenue of $1.06 billion.

"Sales results reflect continued growth in our reconstructive business and we expect to achieve higher levels of penetration with new products as the year progresses," said Zimmer President and Chief Executive David Dvorak.

Despite sales growth being slower than expected, Lehman Brothers analyst Bob Hopkins reaffirmed an "Overweight" rating on the stock. He felt there were one-time factors involved in the slowdown and growth should speed up. Deutsche Bank-North America analyst Tao Levy also reaffirmed a "Buy" rating.

just don't like it

growth