Taking The Pulse Of U.S. Surgical

There would seem to be no good reason for anybody to jump into the washed-out shares of U.S. Surgical, the pioneer in developing laparoscopic instruments. The stock has been in a downspin since the beginning of 1992, when it traded at $120 a share. By January, 1993, it was down to 75, and some people thought the mighty highflier had finally hit bottom. Wrong. In April, the company said hospital orders for its equipment have slowed, which will affect second- and third-quarter results. So most analysts have cut their 1933 and 1994 estimates. The stock currently trades at 35.

So why are some pros now buying heavily? Money runners Keith Schneider and Clarence Bartow, managing partners at Garrison Partners, aren't daredevil speculators, but they have been scooping up shares of U.S. Surgical in recent days. Garrison's proprietary "pattern-recognition technique" has identified the company as a "compelling buy" because of a "reversal" in its volume and direction, says Schneider. This signal, he says, suggests that the stock is on its way to 50 over the near term.

Schneider says the buy signal coincides with the budding rally in the depressed medical stocks. He's convinced that U.S. Surgical will lead the group on the upside. Garrison's system signaled a weakening in Intel in early April--several days before the stock skidded 13 points in one day.

One fund manager expects earnings of $1.95 to $2 a share this year--well above most estimates. And U.S. Surgical Chairman Leon Hirsch insisted recently that the high end of the Street's estimate of $1.15 to $1.90 a share "is more realistic than the low end."

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