Smaller Ortho companies have little price/performance to offer over the major players. However, with aggressive sales techniques these companies have been able to proliferate by persuading surgeons. WMGI has been handcuffed with a DPA (Defered Prosecution Agreement) that limits their ability to persuade. Management had difficulty with the DFA, and violations resulted in an additional 12 months of DPA.
Furthermore, revenue and earnings could be severely damaged by hip implant litigation. Metal on metal contamination, and structural integrity failures indicate that this company does poor product developement. Lost sales and settlement expenses could be significant.
With earnings below 0.30 for FY13, a generous PE of 20 gives a price of $6/share. They may eventually be bought by a major looking to scoop up some revenue, but not with the DPA and pending litigation.
Hey Kauaiboy, thanks for the eloquent and fact filled retort. You contend that "new products" and "strong sales" will propel this stock to $25.
In fact, along with the ongoing layoffs, WMGI is reducing the size of its product portfolio as part of a steamlining plan. Sales will be down over 8% in the next couple qtrs and down 5.9% on the year. The stock has no business trading as high as it is - on any metric.(ref: annual report & press releases)
Save your portolio some pain and sell this one before the 78% YOY earning drop on May 1. - your welcome