(Rewrites, adds detail.)
By Julia Mengewein
Of DOW JONES NEWSWIRES
ZURICH -(Dow Jones)- Switzerland-listed surgical implant and device company Synthes Inc. (SYST.VX) Wednesday reported accelerating sales growth in its main market of North America in the third quarter, and confirmed that it sees low double-digit sales growth through 2009 in local currencies, sending its shares higher.
The U.S.-based maker of surgical instruments and products such as nails and plates to fix fractured bones and support the spine, said group sales for the three months to Sept. 30 rose 7.5% to $868.3 million, from $807.7 million a year earlier and above analyst estimates of $865.09 million. Calculated in the currencies where sales were generated, the figure was up 10%.
At 0815 GMT, Synthes shares traded up 4.30 Swiss francs ($4.26), or 3.5%, at CHF125.70 in a slightly lower Swiss market.
"Sales, especially in Synthes' most important market, North America, beat expectations and showed accelerated growth momentum compared to the first half of the year," said Sybille Bischofberger of Zuercher Kantonalbank.
"That's good news especially after Synthes disappointed in the first quarter, when sales were up 6.7% in North America," the analyst who rates Synthes at overweight said. Synthes, which generates about 60% of its sales in North America, said revenue there rose 9.8% in the third quarter to $528.6 million, above analyst estimates of $520.8 million. Currency adjusted, North American sales grew 10% over the period.
The company said new trauma product launches and sales of existing products, as well as new spine product sales and an expansion of the spine products sales team had boosted North American sales.
"Synthes did much better than its U.S. rival Stryker Corp. (SYK)," said Daniel Jelovcan of Swiss independent broker Helvea, pointing to Synthes' strong innovation skills and good customer service. He rates the company at neutral.
Stryker Tuesday reported flat sales in U.S.-dollars and shaved its year guidance, citing weak hospital spending.
Revenue in Synthes' second-largest market, Europe rose 5.3% in U.S. dollars, and 13% when adjusted for currency fluctuations.
The only miss was recorded in the region Rest-of-World, which includes the Middle East and Latin America. "In the third quarter of 2008, Synthes had a lot of tender business in that region, especially in the Middle East," Bischofberger said, adding that sales from those tenders are booked just once or twice a year. "So if there was no tender business in the third quarter of this year, that's no indication of a weakening in underlying demand." Rest-of-world contributes around 6% of group sales.
Synthes shares have fallen 9% in the year to date, underperforming the Stoxx Europe 600 healthcare sector, which has gained 6.7% over the period.
The market has been cautious on the stock as it is still hard to gauge the impact on Synthes of the U.S. health care reform and its exposure to the economic downturn, especially in the U.S., its most important market.
Synthes, based in West Chester (PA), U.S., is one of the global market leaders in spine and trauma surgery, alongside U.S. rivals Medtronic Inc. (MDT) and Johnson & Johnson's DePuy Orthopaedics Inc. (JNJ), and Stryker.
Company Web site: www.synthes.com
-By Julia Mengewein, Dow Jones Newswires; +41 43 443 80 45; julia.mengewein@dowjones.com