Wells Fargo upgrades surgical products company ArthroCare Corp. (ARTC) to buy from hold.
Analyst Ed Shenkan says $49.7 million first-quarter revenue exceeded his and consensus $48 million estimate. He notes 12 cents earnings per share is lower than his 15 cents estimate and consensus of 14 cents, but excluding foreign exchange, the company would have met consensus earnings per share estimate.
He says with the company exceeding his first-quarter revenue estimate and meeting his gross margin estimate, he's comfortable with ArthroCare meeting or exceeding his back-end loaded 2005 earnings per share estimates.
Shenkan trims his 86 cents 2005 earnings per share estimate to 84 cents, and raises his $1.10 2006 to $1.20. He sets a $36 target.