SHAREHOLDERS MAY WANT TO UNLOAD MENTOR STOCK, ANALYST SAYS

Investors should sell their shares of Mentor "ahead of and after the upcoming silicone gel breast implant approval," Lazard Capital Markets analyst Alexander Arrow said in a Nov. 7 research note.

Lazard's advice is based "not on current operating results but on the belief that market expectations do not include what may be a major new expense -- the potential FDA decision that would require prolonged follow-up exams on every patient who receives a silicon gel breast implant," Arrow said.

Magnetic resonance imaging and unusual blood tests such as sedimentation rate may be required by the FDA once every five years, but would not be funded by insurance, he said. "Hence, the manufacturers would be required to allocate funds for this significant follow-up expense."

The upcoming FDA approval is widely seen as a "highly positive development that will raise both revenue and earnings outlook," Arrow said. But investors could be disappointed because "the new expense of required patient follow-up may hurt earnings more than the incremental silicone gel sales help them" and because some investors are holding onto Mentor stock "in anticipation of a jump from a positive FDA decision."