Mentor Shares Down on 3rd-Quarter Results

[Guest guest]

Apparently somebody, something is getting through to

the FDA . . . Maybe, just maybe, silicone gel implants

won't be approved - at least not without serious,

restrictive conditions! . . . Now for getting the

saline implant situation cleaned up! . . . As many

here know, they are not safe either! - Rogene

http://biz./ap/060207/mentor_mover.html?.v=1

AP

Mentor Shares Down on 3rd-Quarter Results

Tuesday February 7, 4:05 pm ET

By Wallace Witkowski, AP Business Writer

Mentor Shares Drop on 3rd-Quarter Results, Downgrade;

Competitors Fall on Regulatory Uncertainty

NEW YORK (AP) -- Shares of Mentor Corp. slipped

Tuesday after the maker of cosmetic surgery products

reported disappointing third-quarter results late

Monday and analysts were split on the company's

near-term prospects.

Mentor shares fell $1.63, or 3.7 percent, to $42.17 in

afternoon trading on the New York Stock Exchange, at

nearly four times their average volume, after earlier

changing hands as low as $40.40. Shares have traded

between $31.65 and $56.65 over the past 52 weeks.

Lazard analyst Arrow downgraded Mentor to " Sell "

from " Hold " with a $35 price target, on the belief

that the " strategic alternatives " sought for the

company's lagging urology business will likely result

in its sale to an outside buyer, resulting in a

reduction of its 2007 earnings.

Arrow also cited regulatory delays of two key Mentor

products as contributing to the downgrade. The analyst

said Mentor's halting of plans to submit data to the

Food and Drug Administration for its Puragen wrinkle

filler, to pursue a fourth-quarter launch in 2006,

could indicate internal problems with product,

delaying a launch even further.

The FDA has also held up its final approval of

silicone-gel breast implants, owing to the fact that

few at the agency want to risk approving a product

that does not save lives but poses possible health

risks, Arrow said. Also, the analyst doesn't see the

implants contributing much to Mentor's operating

margin, and believes eventual approval is already

figured into Mentor's stock price.

CIBC World Markets analyst Calcagnini, who rates

Mentor a " Sector Outperformer, " disagreed with Arrow's

valuation and calculated the company's share price

does not already include implants approval.

Calcagnini recommended in a note that investors " buy

on weakness " on the belief that silicone-gel implants

could add $1 or more to annual earnings per share, and

the company's failed offer for Medicis Pharmaceutical

Corp. will encourage it to make cosmetic surgery

acquisitions to make up for lost earnings from the

potential urology sale.

Piper Jaffray analyst Thom Gunderson, who rates Mentor

as " Market Perform, " estimated the decision on

silicone-gel filled breast implants may be delayed

until July, a year after the company received an

approvable letter from the FDA. He lowered his price

target to $41 from $46. Gunderson said in an interview

the process is likely being drawn out because the FDA

wants assurances that Mentor has a solid plan to track

women who get the implants and to monitor them for

potential health problems.

" For the FDA, quick means two to three months, "

Gunderson said. " I have no sense this will be quick. "

Silicone gel-filled breast implants were taken off the

U.S. market for cosmetic uses more than 13 years ago

when thousands of women complained that silicone from

leaky or burst implants had made them seriously ill.

In April, the FDA convened an advisory panel to

consider reintroducing the implants to the market.

From an investment standpoint, Gunderson said the lack

of a final approval for the implants leaves Mentor

more exposed than competitor Inamed Corp., which

derives a lesser part of its revenue from currently

approved implants and is in the process of being

acquired by Botox maker Allergan Inc. Inamed is also

awaiting final FDA approval for its silicone-gel

breast implants.

Also on Monday, Allergan extended its exchange offer

for Inamed shares until Feb. 22, since it has yet to

receive antitrust approval on the acquisition. The

company has already tendered 52 percent of Inamed's

shares for either $84 in cash or about 0.85 of an

Allergan share. Shares of Inamed fell $1.78, or 2

percent, to $87.60 on the Nasdaq, and Allergan shares

fell $3.80, or 3.4 percent, to $107.30 on the NYSE.

Mentor reported late Monday its third-quarter profit

fell 22 percent to $12.7 million, or 26 cents per

share. Excluding one-time charges, the company

reported earnings per share of 33 cents, which still

fell below the consensus of 38 cents from analysts

surveyed by Thomson Financial. Revenue was virtually

flat at about $120.5 million, under an analysts

consensus of $130.6 million.