J.P. Morgan Lowering Outlook On Orthopedic Implants (SYK, ZMH, WMGI)

J.P.Morgan Chase & Co. is lowering its outlook on the orthopedic implant market, and thus lowering its price target on shares of Stryker Corporation SYK, Zimmer Holdings, Inc. ZMH and Wright Medical Group, Inc. WMGI. J.P. Morgan now has a price target on Stryker at $49, down from $58. It also lowered its target on Zimmer to $58 from $63, and Wright was lowered to $17 from $21. In the research report, J.P. Morgan writes, "We’ve lowered our forecast for US and Global knee market growth by 200bps this quarter from 3.5% to 1.5% (US) and from 3.8% to 1.8% (Global). For the hip market, we’ve lowered our forecast by 100bs from 2.0% to 1.0% (US) and from 3.1% to 2.1% (global)." It went on to say, "The impact of the model cuts is to lower our 3Q forecasts for SYK, ZMH, and WMGI. We are lowering our SYK 3Q top-line forecast to $1,732M (+4.8%), which is $10M below our prior forecast and $21M shy of consensus (120bps). Our 3Q EPS projection is $0.76 (+9.6%), down $0.01 and now a penny below consensus. For ZMH, we are lowering our 3Q revenue forecast by $11M to $990M (+1.5%) with EPS moving a penny lower to $0.94 (+6.8%). This puts us $9M (90bps) and $0.02 below consensus. Finally, on WMGI, we’re lowering our revenue forecast by $2M to $123.7M (+5.1%) with our EPS estimate moving a penny lower to $0.21 (+10.5%)." Shares of all three companies traded higher today, as the broader markets skyrocketed after stronger than expected GDP growth, and reassuring comments from the Federal Reserve.