Favorable Outcome for Wright

Wright Medical Group, Inc. (WMGI - Analyst Report) recently received a favorable summary judgment in its patent infringement case against Howmedica Osteonics Corp., a subsidiary of Stryker Corp. (SYK - Analyst Report). The lawsuit was filed in 2000, which alleged Wright Medical’s Advance knee implant product to have violated a patent held by Howmedica. This prompted Howmedica to seek an order of infringement and unspecified damages from Wright Medical.
 
The U.S. District Court for the District of New Jersey invalidated Howmedica’s patent in its recent ruling on Nov 24, 2009. Stryker can file another appeal in court, failing which the case will conclude.
 
The favorable outcome of the lawsuit eliminates substantial charges that Wright Medical might have incurred. This prevents erosion of the company’s bottom-line. Wright Medical reported strong fiscal third quarter results. Earnings per share stood at 14 cents, beating the Zacks Consensus Estimate of 9 cents. However, earnings was flat year over year.
 
The company also reported sales growth of 6% year over year in the third quarter. Growth was registered in the company’s hip, knee and extremity products.
 
Wright Medical is a global orthopedic devices company specializing in the design, manufacture, and marketing of reconstructive joint devices and bio-orthopedic materials. The orthopedic industry is highly competitive, and Wright Medical faces challenges from large players, such as, Zimmer Holdings Inc. (ZMH - Analyst Report), Stryker Corp. (SYK - Analyst Report), Johnson & Johnson/De Puy (JNJ - Analyst Report), Smith & Nephew plc. (SNN - Snapshot Report) and Biomet.
 
Presently, we have a ‘Neutral’ recommendation on Wright Medical.

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