Zimmer, Stryker get boost from J&J

CHICAGO (Reuters) - Solid sales in Johnson & Johnson's orthopedic device business on Tuesday boosted shares of Zimmer Holdings Inc and Stryker Corp, suggesting the recession's toll on procedure volumes has been less severe than feared.

Diversified health-care giant J&J reported on Tuesday first-quarter U.S. sales in its DePuy orthopedic device division rose 8 percent. Total sales were up 0.4 percent.

Investors have worried that patients would forego hip and knee replacement procedures in the weak economy either due to lack of a job and insurance coverage, trouble meeting insurance co-payments, or fear of taking time off from work.

"JNJ/DePuy reported healthy (first-quarter) results today on the heels of a positive report from Biomet last week, making us incrementally comfortable that overall orthopedic market trends are holding in fairly well despite macro pressures," Robert W. Baird & Co. analyst Jeff Johnson said in a note to clients.

Privately held Biomet Inc last week said its worldwide hip sales rose 5 percent and knee sales increased 3 percent in the fiscal third-quarter.

Analysts said that while a slowdown in surgical demand is still expected this year, procedure volumes appear to be holding up better than expected.

"Based on these results no apparent "fall off a cliff" is readily visible for procedures in the quarter, a positive sign for ortho and hospital equipment companies," said Leerink Swann analyst Rick Wise.

J.P. Morgan analyst Michael Weinstein said orthopedic sales growth through March was decelerating modestly, but in line with expectations.

"For now, it appears that the impact of the broader economy has not hit large joint results in a major way, although JNJ does expect a 1-2 point slowdown this year vs. 2008," Weinstein wrote in a note.

Shares of Zimmer rose 5 percent to $41.19 in late morning trading on the New York Stock Exchange, while Stryker shares were up 2.9 percent to $36.36.

(Reporting by Susan Kelly; Editing by Tim Dobbyn)