ParfumGigi@aol.com
8 novembre, 2007 12:05
Mentor Drops on Market Uncertainties
Mentor Shares Drop to New Yearly Low on Breast Implant Market Uncertainties,
Competition
November 08, 2007: 12:57 PM EST
NEW YORK (Associated Press) - Shares of cosmetic surgery products maker Mentor Corp. plummeted to a yearly low Thursday, as investors appeared concerned over uncertainties in the breast implant market and competition from rival Allergan Inc.
The Santa Barbara, Calif.-based company's stock fell $3.93, or 9.2 percent, to $38.78, having declined to a new annual low of $37.63 earlier in the day. That level extends beneath its 52-week low of $38.08.
Mentor on Wednesday reiterated its outlook for its fiscal year ending in March 2008, as it reported its fiscal second-quarter profit rose 2 percent on higher MemoryGel silicone breast implant sales.
In a note to investors, Leerink Swann & Co. analyst Gary Nachman maintained his "Market Perform" rating on Mentor's stock. He cited solid fiscal second-quarter results, but expressed fears over softening demand and the downturn in the economy.
Nachman said management noted a weakening in demand during the last month of the second quarter, as plastic surgeons reported a drop-off in patient consultations, which could potentially signal fewer surgical procedures.
The analyst also said Mentor lost some market share to Allergan, which makes breast implants, as the competitor targeted specific Mentor accounts by discounting its prices. Mentor failed to match those prices, which slightly hurt its volumes, according to Nachman.
"We believe Allergan will continue its efforts to take share from Mentor and use all the tools at its disposal, although on its call Allergan stated that it did not discount the price for silicone," said Nachman.
Meanwhile, CIBC World Markets Corp. analyst Amit Hazan said even though second-quarter earnings slightly beat expectations, fiscal year 2008 guidance is worrisome.
"The key issue remains Mentor's ability to meet fiscal year 2008 guidance in the face of slowing procedure volume, consumer confidence concerns, market share losses, and pricing pressure from Allergan," Hazan said in a note to clients.
He said the stock will likely remain in the low $40s until these concerns dissipate.
