St. Jude posts solid financial results, topping estimates

Amritpal Khalsa

St. Jude Medical stock outlook (Part 1 of 2)

Financial results

Last Wednesday, St. Jude Medical (STJ) released its Q3 results, topping analyst estimates, driven by its CRM (cardiac rhythm management) division. The company joins its peers in reporting stellar results with revenue 2.4% greater than expected by Wall Street analysts in its CRM division and a 1% increase from a year ago, to $1.34 billion. Net income for the third quarter rose from 67% from 2012, to $262 million.

St. Jude’s main competitors in the CRM business (comprised of pacemakers and implantable cardioverter defibrillators—or ICDs) are Medtronic (MDT) and Boston Scientific (BSX). The quarterly performance was great and similarly bodes well for Medtronic and Boston Scientific. However, it’s still 1% lower than Q3 in 2012.

St. Jude’s CEO had the following to say regarding the company’s quarterly performance: “One of the most important takeaways from our third quarter is that our global high-voltage or ICD revenue increased 2% on a constant currency basis for the first time in two years, we estimate that we captured approximately 1 full [percentage] point of share in the United States ICD market on a year-over-year basis during the quarter.” This shows business growth, suggesting pricing pressure or the medical device excise tax is the driving agent behind lower third quarter results from a year ago.

Sales growing

St. Jude’s had a great sales quarter and is slowly returning its businesses to an accelerated growth profile. St. Jude’s CEO wants to remain a disruptive innovator, working on technological advancements to drive growth. Yesterday, the manufacturer won FDA approval for its next-gen llumien Optis device, a device aimed at measuring blood flow and providing images of the heart during stent procedures. The company is also working on an implantable cardiovascular wireless communication system (to alert of heart failure) and the world’s first leadless pacemaker, called Nanostim.

Read more about St. Jude’s strategic outlook in Part 2.

Continue to Part 2

Browse this series on Market Realist: