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Thoratec Corp. (THOR)

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We downgrade our rating for Thoratec Corp. (THOR) to Underperform. Fourth-quarter fiscal 2010 revenues and earnings both missed the Zacks Consensus Estimates.

Although Thoratec is still a growing company, its single product line and small size make it a riskier proposition. HeartWare has filed a PMA for a similar device, which will end Thoratec's dominance for the BTT indication in late 2011 or early 2012, leaving it more dependent on the DT indication. However, growth estimates for the DT segment tend to vary.

A lack of clear visibility into the pipeline of next-generation VADs, and absence of defined milestones, further clouds the outlook. It appears that the early hyper-growth phase enjoyed by the company is now leading to more normalized growth.

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