Stryker Slips After Downgrade On FDA Concerns

NEW YORK (AP) — Shares of Stryker Corp. fell Wednesday after a Wells Fargo analyst downgraded the orthopedic device maker, saying the shares are reasonably priced and Stryker may face greater scrutiny from regulators.

Michael Matson cut his rating to "Market Perform" from "Outperform." He pointed out that Stryker shares have done fairly well in 2009, bringing them inside his target range. Matson thinks the company might have to handle increased Food and Drug Administration scrutiny, and may make an acquisition that would decrease profits.

Matson said the FDA expects to start sending more warning letters to companies, noting the Obama administration has eased the review process.

"With Stryker already in the FDA's crosshairs with four warning letters and at least two recent Form-483s, this doesn't bode well in our view," he said. Form-483 letters list problems the FDA has found after inspecting a manufacturing facility.

The analyst wrote that Stryker may make a deal or multiple deals worth $1 billion or less. He estimated that a $1 billion purchase would cut the company's profit by 10 cents per share over the following year.

Shares of the Kalamazoo, Mich., company lost 76 cents to $45.89 in morning trading. The shares have risen 16.8 percent this year, and since reaching an annual low in late March, they are up more than 50 percent. Matson's valuation range is $45 to $48 per share.

The stock has traded between $30.82 and $65.36 over the last year.