Ahead of the Bell: Natus Medical downgraded

A Needham and Co. analyst downgraded shares of Natus Medical Inc. Wednesday, saying he expects the medical device maker be hurt if hospitals decrease their spending in 2009.

Ed Shenkan downgraded the stock to "Hold" from "Buy."

He said hospital spending may fall because consumers have less money to spend on health care, while increased unemployment will leave more people uninsured. Doctor visits and elective surgeries could decrease, he added, and hospitals may try to focus their spending on products that will bring in more revenue instead of just replacing older equipment.

That will lead to decreased revenue for Natus' hearing screening and newborn care businesses, he said.

Natus is buying smaller companies _ mostly recently Oregon-based NeuroCom _ with the goal of lifting its annual revenue to $250 million by the end of 2008. The analyst said investors already expect the company to reach that goal. He wrote that Natus is working to sell itself, but the timing of such a move is undetermined.

Natus shares set an all-time high of $26 on Monday, and closed at $25.31 Tuesday. The stock has nearly doubled in value over the last year.