Kinetic Concepts Inc. (KCI)

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It's been a rocky start for the new year... but here is a hopeful advisor...

http://www.bloggingstocks.com/2007/12/24/best-stocks-for-2008-kinetic-concepts-kci/

Best Stocks for 2008: Kinetic Concepts (KCI) advances wound care
Posted Dec 24th 2007 3:30PM by Steven Halpern
Filed under: Newsletters, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"My top speculative idea for 2008 is Kinetic Concepts (NYSE: KCI), which makes products for advanced wound care and other therapeutic applications," says quantitative analyst Vahan Janjigian, editor of The Forbes Growth Investor.

"KCI's therapeutic categories include advanced products for wound care and tissue repair, which accounted for 79% of first half 2007 revenues.

"The company's proprietary Vacuum Assisted Closure (VAC) technology uses negative pressure wound therapy (NPWT) to treat and promote healing in acute and chronic wounds caused by severe trauma, failed surgical closures, amputations, and serious pressure ulcers.

"VAC systems consist of a pump that provides a controlled level of negative pressure to the wound, foam dressings, occlusive drapes and specialized canisters that collect body fluids, filter odors, and facilitate the safe disposal of medical waste.

"Its prone therapy systems are designed to alleviate pulmonary and post-cardiac-arrest complications associated with immobility. Bariatric care products are used to support obese patients weighing up to 1,000 pounds. These products include specialty beds and patient lift/transfer systems.

"KCI also makes therapeutic surfaces such as beds and overlays that help relieve pressure and/or provide pulsating therapy to patients suffering from pressure sores, burns, and post-operative skin grafts.

"The company's VAC systems provide clear benefits over competing wound care alternatives, such as traditional
gauze dressings. They reduce skin pressure and shear, help provide moisture control, facilitate blood and lymphatic flow to the skin, and require less changing.

"Largely due to these competitive advantages, demand has been rising. Annualized revenue growth has averaged
35% over the past four years. However, growth slowed in recent years due to increased penetration, competition, and lower reimbursement rates due to changes in Medicare Part B.

"Nonetheless,VAC revenue growth rates actually improved in each of the past four quarters. KCI's aggressive R&D spending should help it maintain a competitive edge. Investment efforts have also focused on exploring expansion of VAC technology to other applications, such as tissue engineering and regeneration.

"We believe KCI's prospects are extremely promising. In particular, there is plenty of opportunity for further growth in Asian markets, where the company currently has a minimal level of penetration."