Device Trouble Trips Guidant

"Guidant ICD market share may slip near-term and the company will incur additional costs due to the recall ... but we suspect that there will be no long-term impairment to the Guidant CRM franchise," Bear Stearns' Rick Wise wrote in a research note.

In the short term, Wise thinks other makers of heart-rhythm devices, such as St. Jude Medical (STJ) and Medtronic (MDT), could benefit from Guidant's recalls, but he doesn't expect to see a sustained shift in market share.

Guidant said it was voluntarily advising physicians about the defibrillators, and the Food and Drug Administration is classifying the notice as a recall. Wise said failure rates for Guidant's ICD products are at or below the guideline levels for notification, and other recall implications seem manageable.

"Given the small number of devices involved and the worst of the matter hopefully in public view, we suspect JNJ -- understanding that this is a risk for every ICD manufacturer -- can feel more comfortable that the worst is over," Wise wrote. Bear Stearns says it does and seeks to do business with companies covered in its research reports.

Johnson & Johnson shares were up 11 cents to $66.67.

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