NEW YORK (AP) â¿¿ Shares of medical and surgical supply company Owens & Minor Inc. fell Wednesday after a Baird analyst downgraded the stock, citing market pressure on the sector.
THE SPARK: Baird analyst Eric Coldwell downgraded shares to "Neutral" from "Outperform" and set a $30 price target.
THE ANALYSIS: "Health care equities have been broadly punished in recent weeks and valuation is well below normal for Owens & Minor, but also for many stocks with better profiles and clearer catalysts," he said, in a note to investors.
He still views Owens & Minor as a defensive stock, but doesn't expect outperformance for the remainder of the year. He cited flat revenue expectations in 2010 because of a weak market, along with competitive pressure and pricing pressure.
"In a period of extreme health care sector pessimism and with numerous alternative investments at similar or better valuation, it is difficult to see near-term outperformance," he said.
Owens & Minor on Monday reported second-quarter profit that missed Wall Street expectations and forecast 2010 earnings at the lower end of its guidance. The company said high unemployment is affecting consumers' use of health care services, and thus use of its medical and surgical supplies.
SHARE ACTION: Down 70 cents, or 2.6 percent, to $26.38 in morning trading. The stock has traded between $25.52 and $32.80 over the last 52 weeks.