Stryker ( SYK) shares slipped 3% after the orthopedic device maker posted a disappointing third quarter. The company saw third-quarter revenue jump by 14% to $1.17 billion and operating profit, excluding special items, climb 21% to $163 million, or 40 cents a share. Wall Street was looking for revenue of $1.19 billion and profits of 41 cents. Stryker also posted an 11% rise in orthopedic implant sales that fell short of some analyst expectations. The company pledged to deliver the 20% profit growth that Wall Street expects next year. However, the company confessed that a "much tougher price environment" for orthopedic implants -- with prices falling as much as 2% -- could make things tougher than usual. "Is it going to be harder? Yes," said CEO Stephen MacMillan. "It's going to stretch us and push us more." The company's stock, which jumped as much as 2.1% ahead of the report, dropped 3.2% to $45 in after-hours trading. By now, of course, investors have grown increasingly skittish about the orthopedic device group. They have seen five companies -- including Biomet ( BMET), Smith & Nephew ( SNN) and Wright Medical ( WMGI) -- either release disappointing results or warn that they are coming. Moreover, they have listened to industry leader Zimmer ( ZMH) become more and more vocal about pricing pressures and slowing growth for the future. Leerink Swann analyst Jason Wittes suggested on Monday that the bad news would not necessarily end there. "Since our downgrade in early February of 2005, valuations and multiples have come down and are approaching our targets," said Wittes, who has a market-perform rating on the sector. "But we remain cautious on the orthopedic group ... particularly as we are still in the early innings of a changing environment and we expect revisions to 2006 earnings." In the meantime, Wittes felt that Stryker would fall slightly short of third-quarter expectations. He figured the company would need strong results from its MedSurg unit to offset weakness in its orthopedics division, just as it did one quarter earlier. The MedSurg unit did, in fact, come through with a powerful 21% jump in third-quarter sales. Baird analyst Suey Wong offered a similar forecast. In general, he said, Stryker's MedSurg division "continues to drive the company's overall business with solid results coming from all three of MedSurg's major segments." He predicted that Stryker would post an 18% jump in MedSurg sales compared to a smaller 13% increase in its orthopedics business. There, he was looking for a "generally healthy" knee market to drive solid midteens growth while expressing more caution about the tougher hip market for now.