Taking Heart At ATS Medical

By Gene G. Marcial

An Irregular Pulse
New management at ATS Medical (ATSI ) (ATSI), a maker of mechanical heart valves, is giving shareholders fresh hope. Although the stock tumbled from 6 in February to 5.10 on Mar. 31, some see it hitting new highs in a year. Earnings and revenues are headed up. A heart valve that is "clinically superior," plus an experienced sales force, have generated strong momentum, says Gregory Simpson of investment firm Stifel Nicolaus. He rates ATS "outperform," with a 12-month target of 8.

ATS is chipping away at St. Jude Medical's (STJ ) nearly 50% share of the world mechanical-valve market, he says, because St. Jude is focusing more on pacemakers. ATS has about 10% of the world market, which Simpson sees jumping to 17% in 2005 and to 25% in 2006. He expects ATS to reduce its loss in 2004 on sales of $27.7 million, up from $18.5 million in 2003. Dan Perkins of Perkins Capital Management, which owns shares, says ATS valves, which use a pivot design, minimize blood accumulation -- and lower the risks. "ATS is a compelling play as it is in its growth phase," says Sunaina Murthy of AIM Capital Management, with a 6.1% stake.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

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