Symmetry Medical Gets FDA Nod

Orthopedic implants and instruments maker Symmetry Medical (SMA - Analyst Report) recently revealed that it has obtained 510k clearance from the U.S. Food and Drug Administration (FDA) for its Flash Pak Evolution valve. The valve is designed for usage with the company’s Flash Pak sterilization offering.

The company has applied for a patent for the valve’s stainless steel design, intended for easy usage. This valve will be solely sold by the company’s wholly owned subsidiary Symmetry Surgical.

Symmetry recently retained its guidance for 2012. The company continues to expect sales in a band of $410 million and $425 million for the full year.

The earnings per share (on a reported basis) target has been set in a range of 30 cents to 40 cents for 2012. Adjusted earnings per share are expected between 55 cents and 65 cents. The forecast excludes one-time items such as facility closure/severance, acquisition, impairment, amortization and legal charges, which are expected to dilute 2012 earnings by roughly 25 cents a share.

Symmetry is the largest OEM provider of implants and related surgical instruments and cases to orthopedic devices manufacturers. Its major customers include Johnson & Johnson’s DePuy, Stryker (SYK - Analyst Report) and Zimmer Holdings (ZMH - Analyst Report).

The company has created a distinct competitive niche in the orthopedic devices market with its “Total Solutions Approach.” It is investing in management structure revamp and enhancing customer collaboration, which should push growth moving forward.

Symmetry in December 2011, completed its $165 million takeover of the surgical instruments business of Codman. Besides diversifying its revenue base, the acquisition enables the company to broaden its global presence.

However, Symmetry still faces price and procedure volume pressure on the orthopedic front. Also, the company’s high spending may continue to weigh on its bottom line. We are currently Neutral on the stock, supported by a short-term Zacks #3 Rank (Hold).