RBC report: uncertainty in large caps, opportunity in small caps

By Lisa Kerner

Charlotte, N.C., Oct. 9 - The fall earnings season is bringing with it uncertainty in the large caps and opportunity in the small caps, according to RBC Capital Markets analyst Phil Nalbone's medical technology September quarter preview.

Boston Scientific Corp.'s preliminary results suggest little if any improvement in the weak ICD market that has declined in the last two quarters. RBC predicts the market will decline by 3.8% in the September quarter. Limited visibility of Medtronic Inc., St. Jude Medical Inc. and Boston Scientific Corp. programs designed to restore physician and patient confidence in ICDs makes timing a market recovery very difficult.

Big-cap cardiology players are facing challenges in the drug-eluting stent market a well, as the market is expected to stay flat for the next few years. According to the report, Medtronic's Endeavor stent is positioned very well against Johnson & Johnson's Cypher and Boston Scientific's Taxus. However, look for Abbott's Xience stent to be the rising star, the analyst said.

Small-cap Cutera Inc. is still the best way to play the aesthetic boom, says Nalbone in his report, especially with demand for aesthetic laser- and light-based procedures. Zoll Medical is broadening the product line and should meet or exceed the analyst's expectations.

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