Gabelli Has Buy On Wright Medical Group (WMGI)

Gabelli & Co. is initiating coverage on Wright Medical Group WMGI with a Buy rating. In a note to clients, Gabelli & Co. writes, "Initiating coverage with a Buy recommendation and 2012 PMV of $22. With a steady knee and hip business, and a unique and growing foot and ankle product that provides differentiation in the $30.5 bn orthopedics implant space, we believe Wright is an attractive takeover candidate. As SG&A is predominantly spent on the sales force, we estimate that a strategic acquirer would be able to reduce Wright's 2012P SG&A expense by 12% of revenues, resulting in synergies of nearly $70 mm. With Wright's leading position in foot and ankle, we expect 2011E-2015P organic growth of over 12%. Johnson & Johnson's interest in Synthes (SYST CH) underscores our belief that the larger players in the industry will seek to grow earnings through mergers and acquisitions of smaller companies such as Wright." Shares of WMGI are up 18 cents to $15.84, a gain of 1.15% this morning.