On Sep 18, we retained
St. Jude Medical Inc.
) at Neutral following its second-quarter results. Despite a
difficult Med-tech space, it is worthwhile to note this medical
devices giant's strong ability to drive bottom-line growth on the
back of cost-saving measures and restructuring efforts.
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ST JUDE MEDICAL (STJ): Free Stock Analysis
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Why the Retention?
On Jul 17, St. Jude's second-quarter adjusted earnings per share
of 96 cents beat the Zacks Consensus Estimate of 94 cents, and
transcended the year-ago earnings by 9.1%. Revenues grew 2% in
constant currency to $1,403 million, comfortably exceeding the
Zacks Consensus Estimate of $1,364 million. Based on its
progress, STJ raised the bottom end of its adjusted earnings for
2013 to the band of $3.70-$3.73 from the earlier band of
The company's earnings have managed to beat the Zacks Consensus
Estimate in 3 out of the last 4 quarters, while meeting the same
in the first quarter of 2013, with an average surprise of 2.27%.
Following the earnings release, the Zacks Consensus Estimate for
2013 increased 0.3% to $3.73 per share over the last 60 days. The
Estimate for 2014 also increased 0.3% to $3.97 over the same
A spate of new growth drivers such as product launches and
strategic acquisitions are expected to lead to accelerated sales
growth. The Atrial Fibrillation business has been posting
double-digit growth and is expected to maintain this momentum
going forward. We are also positive on St. Jude's restructuring
and cost saving measures that are helping to maintain the bottom
However, St. Jude faces increased competitive and pricing
pressures, as well as currency fluctuations and other
macroeconomic headwinds. Although the core Cardiac Rhythm
Management business is showing recent signs of stability, the
underlying market continues to be weak.
Other Stocks to Consider
Other medical stocks worth considering are
), with a Zacks Rank #1 (Strong Buy), and
), both carrying a Zacks Rank #2 (Buy).