The market is a surprisingly forgiving place sometimes, and that's working in the favor of medical device manufacturer Arrow International (NASDAQ:ARRO). For while the company is absolutely making progress with its recovery from a bad capacity/backorder situation, the market seems to already be giving the company credit above and beyond what current financials show.

Revenue was up about 3.5% this quarter as reported, though up a little more than that on a constant-currency basis. Though sales of cardiac care products dropped a bit, the central venous catheter and specialty catheter businesses both made solid showings. Speaking of the former, customer reaction to a new (and higher-priced) kit for central venous applications seems quite encouraging.

Below the top line, some of that encouragement wanes. Gross margins slipped, even if you add back an inventory step-up charge related to an overseas acquisition. Likewise, operating income also fell by a double-digit percentage even if you give them credit for non-comparable expenses. Granted, some of this is to be expected as the company brings on new manufacturing capacity and whatnot, and performance was better sequentially, but it does harken back to earlier warnings that there won't be quick fixes here.

With companies like Abbott Labs (NYSE:ABT), Bard (NYSE:BCR), Boston Scientific (NYSE:BSX), and Tyco (NYSE:TYC) competing in Arrow's core businesses, I'm admittedly a little surprised that this company is still independent. But when you offer necessary (if not exciting) products and you're freer of the bundling arrangements that larger companies often seek out with customers, that can be a workable model.

Arrow's stock seems to have had its "relief run" and I wouldn't be of a mind to chase it. It's a good company, yes, but a little rooting around from diligent Fools can turn up some med-tech ideas with better valuations today.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).