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Home » Impact of Cordis exit from Cypher stents on SurModics not severe

Impact of Cordis exit from Cypher stents on SurModics not severe

June 21, 2011 By MedCity News

Last week, the stock price of Eden Prairie, Minn.-based SurModics Inc. (NSDQ:SRDX) took a real beating when Johnson & Johnson (NYSE:JNJ) announced that it will stop making the Cypher and Cypher Select Plus stents by the end of the year.

The company licenses the technology that J&J subsidiary Cordis Corp. uses to coat the Cypher stents. After J&J made its decision public, SurModics’ stock swooned 17 percent even as CEO Gary Maharaj sought to soothe investors by saying that executives have "long anticipated the continuing decline of royalties from Cypher in our strategic and operating plans." SurModics reiterated its earnings guidance for fiscal 2011.

The Zacks Investment Research analyst blog agreed that the hit to revenue from the loss of Cypher royalties is not going to be "severe." Zacks maintained its "strong buy" rating on the stock in the short term and an "outperform" rating in the long term.

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"We believe that investors should be more concerned about the outcome of the measures taken by SurModics to revive itself (work-force reduction, change in management and operating segments), rather than on the loss of Cypher stent revenues," the analyst blog read. "We believe that the current price represents an attractive entry point for long-term investors."

The change in management refers to Maharaj being named CEO in December after some drama at the company involving an activist shareholder.

Filed Under: Business/Financial News, News Well, Stents Tagged With: Cordis Corp., Johnson and Johnson, SurModics Inc.

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