Monday, October 27, 2008

Thoratec (NASDAQ:THOR): Buy aggressively on any weakness in the stock. $31 target. - Canaccord

Canaccord is out with a very strong defense on Thoratec (NASDAQ:THOR) following a medical device correction (MDC) notifying physicians the percutaneous lead in HM-II may malfunction over time via

Action. *Buy aggressively on any weakness in the stock. $31 target.

*NOT a recall...clearing the air. *Released Friday post-close, this report has been broadly mistaken as an HM-II recall; which it is NOT. It is instead a notification mandated by FDA making physicians/patients aware the lead, which connects the pump with the external controller, may suffer “wear and fatigue [that] may result in damage that could interrupt pump function, require re-operation to replace the pump and potentially… serious injury or death.” There were only 27 lead failures in 1,972 HM-II implants over five years (five deaths; none caused by the lead).

*Is this “significant” to docs? Will it impact uptake? *After speaking over the weekend with several LVAD surgeons, Canaccord's key takeaways are: 1) every physician said the notice is NOT new news to clinicians, thus would not impact practice patterns at all; if anything they were surprised by the “low” incidence rate (27/1,972); 2) HM-II improves patients’ health so much their activity level increases dramatically (e.g., driving a Harley to work) which increases wear on the lead; 3) these patients are sick and have NO other options; as such lead fatigue is the least of their worries; 4) all of the investigators agreed this issue would have NO impact on the DT trial outcome.

*Weekend due diligence turned out quite bullish – think upside is possible to Q3 (report Thursday), Q4 and 2009 estimates. *Not only did clinicians quell initial concerns that this may adversely impact HM-II uptake, but our surgeon calls also suggested adoption by both transplant and non-transplant hospitals continues at a strong clip.

Notablecalls: Bounce candidate for sure. BofA is also out in defense. Could hit $20 level in a jiffy

PS: Lazard on THOR: Firm notes THOR fell ~50% after hours and they believe it is possible it could fall further on Monday as they believe the current market is not very comfortable with risk."

1 comment:

LT said...

Thoratec posts better than expected3Q profit on heart device sales: