Moody's sees problems for device makers in 2009

Shares of medical device manufacturers traded lower Wednesday as investors considered whether a coming recession would damage sales of equipment sold to hospitals.

Credit rating service Moody's lowered its outlook for the sector to "negative" from "stable," stating that credit problems could cause hospitals to cut back on investment in imaging scanners, medical implants and other devices.

"The challenges facing the hospital sector lead us to expect softening demand for certain medical products," said Diana Lee, a vice president with Moody's.

Moody's said slowing device sales coupled with an environment favorable to acquisitions could raise liquidity concerns for companies in the sector. While the overall outlook for the sector is "negative," companies that make lifesaving products, such as Baxter International, are more likely to weather the recession than companies that make cosmetic treatments, such as Syneron Medical Ltd.

Shares of the world's largest device company, Medtronic Inc., fell $1.98, or 4.9 percent, to $38.10 in afternoon trading. Competitor St. Jude Medical lost $1.20, or 3.4 percent, to $33.73. Boston Scientific shares fell 74 cents, or 9.4 percent, to $7.15.