St. Jude Medical Inc.
) is set to report its first-quarter 2013 results before the
opening bell on Wednesday, Apr 17. Let us see how things are
shaping up prior to the announcement.
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ST JUDE MEDICAL (STJ): Free Stock Analysis
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In the last quarter, the medical device major posted a 2.22%
positive earnings surprise on the back of strategic realignment
initiatives to reduce operating expenses. However, organic
revenue growth declined.
Factors to Consider this Quarter
New growth drivers such as an innovative product line along with
restructuring efforts to streamline the underlying business will
likely be accretive for STJ in the long term. The company has
received a number of regulatory approvals for its latest
offerings as well as initiated a number of clinical trials in the
first quarter, which is encouraging.
While St. Jude's business fundamentals remain strong, we are
concerned regarding the uncertainty prevailing at the company's
core implantable cardiac defibrillators (ICD) business. Domestic
sales are likely to remain dampened until the pending disputes
involving the warning letter issued by the FDA for its Sylmar
facility is resolved. Meanwhile, we expect international revenues
to boost overall revenues.
However, we are cognizant about the ongoing stiff global
austerity measures and difficult healthcare environment. Further,
the Med-Tech medical devices tax is expected to impact margins,
beginning this quarter.
Our proven model does not conclusively show that St. Jude is
likely to beat earnings estimate this quarter. That is because a
stock needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not
the case here, as you will see below.
Zacks Earnings ESP: The Most Accurate estimate stands at 91
cents, while the Zacks Consensus Estimate is pegged at 92 cents.
This comes to a difference of -1.09%.
Zacks Rank #3 (Hold): St. Jude's Zacks Rank #3 (Hold)
lowers the predictive power of ESP. The Zacks Rank #3 together
with -1.09% earnings ESP makes surprise prediction difficult.
Other Stocks to Consider
Here are some other companies from the medical sector you may
want to consider as our model shows they have the right
ingredients to post an earnings beat this quarter:
), Earnings ESP of +18.18% and a Zacks Rank #1 (Strong Buy)
Coventry Health Care Inc.
), Earnings ESP of +7.69% and a Zacks Rank #1 (Strong Buy)
), Earnings ESP of +8.00% and a Zacks Rank #2 (Buy)