St. Jude Remains Neutral - Analyst Blog

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We reiterate our Neutral recommendation on St. Jude Medical ( STJ ). St. Jude reported first quarter fiscal 2012 adjusted earnings per share of 86 cents beating the Zacks Consensus Estimate of 83 cents per share and surpassing the year-ago earnings of 80 cents per share.

Adjusted earnings exclude extraordinary and one-time charges such as restructuring expenses to modernize manufacturing in the Cardiac Rhythm Management ("CRM") segment. In the reported quarter, profit dropped 9% to $212 million (or 67 cents a share).

St. Jude reported net revenues of $1,395 million, up 1% year over year, beating the Zacks Consensus Estimate of $1,383 million. Net sales rose 2% on a constant currency basis. Healthy growth across the company's smaller Atrial Fibrillation ("AF") and Neuromodulation segments was largely offset by the decline in the core CRM division and the Cardiovascular segment.


Based on a positive start to 2012, the company raised its earnings forecast.  We expect global demographic trends, aging population and the rapid urbanization of developing countries to drive long-term growth of this stock.

St. Jude is consistently recording revenue growth and positive earnings surprises over the past several quarters. We are impressed by its solid fundamentals, healthy growth trajectory, strong product mix, robust pipeline and cost management initiatives.

While a host of new growth drivers (including new products and emerging markets) is expected to boost results in 2012 and beyond, we remain cautious about increased competition, a still soft CRM market and the dilutive impact of acquisitions.

A still choppy CRM space overhangs on St. Jude and its peers Medtronic ( MDT ) and Boston Scientific ( BSX ). Our long-term Neutral recommendation on St. Jude is in agreement with a short-term Zacks #3 Rank (Hold).


 
BOSTON SCIENTIF (BSX): Free Stock Analysis Report
 
MEDTRONIC (MDT): Free Stock Analysis Report
 
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
 
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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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BSX , MDT , STJ

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