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Goldman Sachs Maintains Thoratec (THOR) As 'Neutral'

 April 05, 2012 12:50 PM

Goldman Sachs (GS) maintained its "Neutral" rating on shares of Thoratec Corp. (Nasdaq:THOR), a developer of ventricular assist devices used for circulatory support.

On Wednesday, the US Food & Drug Administration (FDA) announced it has classified the Thoratec HeartMate II left ventricular assist (LVAD) system recall as a Class I recall.

"While we think the recall has headline risk and may cause some concern in the clinical community near term, we see the issues at hand as addressable, and the company has identified a fix (new technique)," the brokerage wrote.

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Given that the heart failure patient population has no alternative therapy and that Thoratec has no immediate competition in the US, GS said it does not anticipate a material change to current 2012 Street forecasts.

GS estimates 2012 HeartMate II revenue in the US will be $220 million, or roughly 48% of total sales. Should problems persist, there could be a longer-term impact to Thoratec when new competition enters the market later this year, the brokerage said.

"Overall, we think THOR price action is more a response to headline risk than fundamental changes to the company, and see some near-term momentum in the shares," the brokerage wrote. "Still, competition in the US, a lack of major new products in 2012, and the need to invest in market development are keeping us on the sidelines."

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On Thursday, the stock fell 0.15 percent to trade at $32.78. Over the past year, shares have been trading between $26.50 and $38.07.



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