UPDATE 1-ATS Medical shares sink on Q4 loss forecast

(Adds background, analyst comments; updates share movement)

By Krishnakali Sengupta

BANGALORE Jan 12 (Reuters) - Shares of ATS Medical Inc ATSI.O fell as much as 20 percent on Tuesday, a day after the cardiac device maker forecast a fourth-quarter loss compared with its previous expectations of a profit, hurt by an unexpected slowdown in two of its businesses.

For the fourth quarter, the company now sees revenue in the range of $18.4 million to $18.8 million.

Duncan Williams analyst James Terwilliger, however, believes the market was over-reacting to the news, as the preliminary numbers were not significantly below his revenue estimates of $19 million, and still represents a growth of about 2 percent to 4 percent from the prior-year quarter.

ATS Medical said the shortfall in the outlook was due to a slowdown in its worldwide mechanical valve business growth and lower-than-planned growth for the surgical ablation business within the United States.

The company now sees operating and net losses in the fourth quarter, compared with its previous forecast of an operating profit and near breakeven to slightly positive net income.

However, ATS projected its growth will begin to re-accelerate in the latter half of 2010.

For 2010, ATS Medical sees revenue growth of about 8 percent to 10 percent, the company said.

"To me the story is about new products' visibility and they have launched a number of products in 2009 ... and the only way to keep up with the competition is by developing high-end medical devices, where I think they have a very attractive portfolio", analyst Terwilliger added.

In the current quarter, the company launched the ATS 3f Aortic Bioprosthesis tissue valve in the United States and said it remains very excited about its sutureless heart valve platforms.

ATS Medical competes with giants like Medtronic Inc (MDT.N), the world's largest stand-alone maker of medical devices, St. Jude Medical Inc (STJ.N) and cardiovascular device maker Edwards Lifesciences Corp (EW.N).

Shares of the company were down 17 percent at $2.70 in afternoon trade on Nasdaq. They touched a low of $2.59 earlier in the session. For related alerts, double click [ID:nWNAB2999] . (Editing by Gopakumar Warrier and Anil D'Silva)