Orthopedic-device makers continue to bounce back. The companies have been hurt in the past by pricing pressures on their artificial joints and government investigations of their business practices. Now, however, some experts sense relief on the way -- and, in fact, believe that the companies could be poised for their strongest performance in years. Wachovia analyst Michael Matson kicked off 2007 with an upgrade of the entire sector -- and a special endorsement of industry leader Zimmer ( ZMH) -- in anticipation of that rally. "We expect 2007 to be a better year for the orthopedics firms, particularly the larger ones, given stable pricing and mix, less reimbursement uncertainty, an improved product cycle and favorable exchange rates," Matson wrote on Wednesday. Meanwhile, "we believe it is possible but unlikely that (industry probes) will be resolved during 2007. A resolution of the cases could be a positive catalyst since it would remove a major overhang" on the group. Matson says prices for reconstructive joints -- pressured downward last year -- could actually rise by as much as 3% in 2007. For starters, he says, Medicare has stepped up its payments for joint-replacement surgeries this year. Before, he notes, Medicare offered more modest increases that failed to offset the rising cost of joint implants used in the operations. Thus, he adds, hospitals started to lose money on some Medicare joint-replacements and pressured device makers to lower their prices as a result.