It looks like the third quarter was pretty tough for British orthopedic company Smith & Nephew
Sales were led by relatively strong orthopedic revenue, up 15%, while wound management and endoscopy grew at low-single-digit and high-single-digit rates, respectively. Performance in orthopedics was broadly OK, as knee sales rose 13%, hip sales climbed 10%, and the trauma business was up 15%. That suggests some share growth in hips; the knee business gave up a little share in the U.S., though it probably gained somewhat overseas.
I've talked about the expected doldrums for the orthopedics market, but Smith & Nephew might have a few aces up its sleeve. The company's launch of a new hip resurfacing system should produce a sales bump, since Smith & Nephew will be only the second player in the market behind Biomet
The trouble with Smith & Nephew, though, is that it's a smaller player in this market. Though a bit bigger than Biomet in terms of revenue, it's smaller than Zimmer, Stryker
The entire orthopedic sector is getting pretty interesting from a value perspective. I'm more inclined to go with Stryker as a bet on an industry recovery, but if Smith & Nephew's newer products live up to their potential, current growth expectations might prove to be too conservative, and the stock could do well.
Bone up on the orthopedics business:
The Motley Fool has kicked off its ninth annual Foolanthropy campaign! Nominate your favorite charities on our Foolanthropy discussion board through Nov. 6. For guidelines on what makes a charity Foolish, visit www.foolanthropy.com.