St. Jude Medical Looks Attractive With Solid Returns - Analyst Blog


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On July 8, we have updated our research report on St. Jude Medical Inc. ( STJ ), which currently looks attractive with solid one-year return of 52.5%, much higher than the S&P 500 return of 19.7% as well as returns of 22.9% and 38.7% posted by the company's peers Medtronic, Inc. ( MDT ) and Boston Scientific Corporation ( BSX ), respectively.

On Jul 7, shares of the St. Paul, MN-based medical devices major reached a new lifetime high of $71.90. We believe global demographic trends, ageing population in developed nations and the rapid urbanization of developing countries should support company growth.

We are particularly encouraged by St. Jude Medical's recent acquisition of privately-held CardioMEMS, Inc. at the beginning of last month. With the closure of the CardioMEMS acquisition, St. Jude Medical expects accelerated growth in its cardiovascular segment.

The CardioMEMS HF System is a first-of-its-kind U.S. Food and Drug Administration (FDA)-approved heart failure monitoring device that has been proven to significantly reduce heart failure-related hospitalizations. It has set a new treatment paradigm for heart failure that reduces the need for hospitalizations and improves the quality of life for patients.

The CardioMEMS HF System has already obtained the CE Mark approval in the EU. St. Jude Medical now plans to initiate the system's strategic launch in the U.S.

Recently, St. Jude Medical also received the 2014 Innovation Award at Cardiostim 2014, the 19th World Congress in Cardiac Electrophysiology and Cardiac Techniques for its Nanostim leadless pacemaker.

A congress committee of electrophysiologists has chosen St. Jude Medical's Nanostim leadless pacemaker for the award being the most innovative product in electrophysiology and cardiac technique.

A few days back, St. Jude Medical also resolved the FDA warning letter regarding the company's Sylmar facility in California. Last year, FDA had warned St. Jude Medical for serious violations at the plant, which included a failure to validate testing methods.

For full year 2014, St. Jude Medical upgraded its revenues guidance to the range of $5,610 to $5,760 million from the prior range of $5,600 million to $5,750 million. It also upgraded its adjusted earnings per share guidance to $3.95-$4.00 from the prior range of $3.94-$3.99. The current Zacks Consensus Estimates for earnings per share and revenues for the year are pegged at $3.98 and $5,700 million, respectively.

Currently, St. Jude carries a Zacks Rank #3 (Hold). A better-ranked stock in the medical products industry is Wright Medical Group Inc. ( WMGI ), which carries a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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