St. Jude Medical Inc.
) third-quarter adjusted earnings per share of 90 cents beat the
Zacks Consensus Estimate by a penny. It also surpassed the
year-ago earnings of 83 cents by 8.4%. Adjusted earnings were at
the higher end of the company's third-quarter guidance of 88-90
cents a share.
Net income (including one-time items) for the quarter surged
48.9% to $262 million or 90 cents a share from $176 million or 56
cents per share in the year-ago quarter.
Revenues inched up 1% (3% in constant currency) year over year to
$1,338 million in the third quarter and exceeded the Zacks
Consensus Estimate of $1,321 million. Unfavorable foreign
currency lowered total revenues by $26 million. Revenues in the
U.S. (48.3% of total revenues) and in the international markets
increased 1.1% and 0.7% to $646 million and $692 million,
respectively in the reported quarter.
Gross margin declined by a whopping 200 basis points (bps) to
71.2% in the quarter from 73.2% in the prior-year quarter.
Selling, general and administrative expenses decreased 0.9% to
$452 million. Research and development expenses grew 1.2% to $172
million in the quarter. However, operating margin rose 570 bps to
23.4% from 17.7% a year ago, mainly on account of lower special
Revenues from the Cardiac Rhythm Management (CRM) division - St.
Jude's mainstay - slid 1% (flat in constant currency) to $682
million. This represents a marked improvement from the 4% decline
reported in the second quarter of 2013. ICD revenues improved 1%
(up 2% constant currency) to $418 million, while pacemaker sales
dropped 5% (down 3% in constant currency) to $264 million.
The Atrial Fibrillation division is the only business that is
giving higher returns compared to the other segments. Revenues
from this division climbed 7% (up 10% in constant currency) year
over year to $235 million.
Revenues from the Cardiovascular franchise inched up 1% (4% in
constant currency) to $317 million. Within Cardiovascular,
vascular product revenues dipped 1% to $168 million while
structural heart product revenues grew 3% to $149 million.
Neuromodulation revenues were up roughly 3% both in reported and
constant currency bases to $104 million in the quarter.
St. Jude exited the third quarter of 2013 with cash and cash
equivalents of $1,245 million, 4.3% higher than $1,194 million as
of Dec 29, 2012. Long-term debt increased 33.5% to $3,403 million
from $2,550, as of Dec 29, 2012.
STJ has provided its forecast for the fourth quarter and has also
revised its earnings guidance for 2013. The company expects total
revenues for full year 2013 to be in the range of $5,394 million
to $5,474 million.
Further, the company raised its adjusted earnings expectations
for the year to the band of $3.72-$3.74 from the earlier range of
$3.70-$3.73. The current Zacks Consensus Estimate for 2013
revenues and earnings are pegged at $5,450 million and $3.72 per
BIO-RAD LABS -A (BIO): Free Stock Analysis
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ST JUDE MEDICAL (STJ): Free Stock Analysis
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For the fourth quarter, St. Jude anticipates revenues to be in
the range of $1,315 million to $1,395 million and adjusted
earnings between 95 and 97 cents a share. The Zacks Consensus
Estimate for revenues and earnings for the fourth quarter stands
at $1,388 million and $96 cents per share, respectively.
We are impressed with STJ's third quarter results, which beat
estimates at both fronts. Moreover, the company's raised guidance
is encouraging. New products from fresh acquisitions should
further propel the top line in the near term. We have also noted
sequential gradual improvement in the beleaguered core CRM
St. Jude currently carries a Zacks Rank #2 (Buy). Other medical
products companies such as
Bio-Rad Laboratories, Inc.
Boston Scientific Corp.
) are also expected to do well. While RMD and BIO carry a Zacks
Rank #1 (Strong Buy), BSX has a Zacks Rank #2 (Buy).