On Jan 2, Zacks Investment Research downgraded
St. Jude Medical Inc
) to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold).
BOSTON SCIENTIF (BSX): Free Stock Analysis
CARDIOVASCLR SY (CSII): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
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Why the Downgrade?
St. Jude lately announced its receipt of the highly regarded CE
mark approval for its 25 mm Portico Transcatheter Aortic Heart
Valve Implantation System. This milestone achievement assures the
company of a likely steady flow of revenues through the coming
quarters, especially in the European Markets.
However, the recent delays in getting the FDA approval dampens
the growth potential in the Cardiac Rhythm Management (CRM)
segment of the company. Further, the impact associated with the
healthcare reform measures is uncertain as players in the health
care sector are striving hard to sustain themselves amid changes
introduced by The Patient Protection and Affordable Care Act.
Medical device makers like STJ are also worried about the high
medical device excise tax, imposed by the Obama administration,
which threatens to erode margins and in turn, affect
The persistent weak macro-economic conditions could further
hinder the growth prospects as the company is already facing
pricing pressure, accompanied with austerity measures.
Moreover, the increased competition from
Boston Scientific Corp.
) threatens to eat into STJ's market share.
St. Jude Medical reported third-quarter 2013 adjusted earnings
per share of 90 cents, beating the Zacks Consensus Estimate by a
penny. Revenues of $1,338 million also exceeded the Zacks
Consensus Estimate of $1,321 million. Though STJ exceeded the
Zacks Consensus Estimates on both earnings and revenue fronts, a
decline in the gross margin remains a cause of concern.
Other Stocks to Consider
Investors interested in the medical devices industry can look at
Cardiovascular Systems Inc
) carrying a Zacks Rank #1 (Strong Buy).