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St. Jude Medical Hits New 52-Week High

Zacks Equity Research

Shares of major medical devices manufacturer St. Jude Medical Inc. (STJ) reached new 52-week high of $61.93 in mid-day trading last Friday. Shares of the company closed at $61.89 on the same day, representing a solid year-to-date return of 73.2%.

STJ has a market cap of $18.1 billion. Average volume of shares traded over the last three months stood at approximately 2,086.5K.

Shares of St. Jude Medical started escalating following its strong third quarter results on Oct 16 and higher earnings guidance. Adjusted earnings per share in the quarter were 90 cents and 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.

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. 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.

STJ upgraded its adjusted earnings expectations for 2013 to the band of $3.72–$3.74 from the earlier range of $3.70–$3.73. The current Zacks Consensus Estimate for 2013 earnings is pegged at $3.73 per share, which lies within the guided range.

Recently, St. Jude’s board of directors authorized a share repurchase worth up to $700 million of its outstanding common stock. Since 2010, STJ has repurchased shares worth $3.0 billion. As of Dec 6, 2013, St. Jude had roughly 292 million issued and outstanding shares.

Currently, St. Jude carries a Zacks Rank #3 (Hold). Despite a difficult Med-tech space, we are optimistic about St. Jude’s strong ability to drive bottom line growth on the back of cost-saving measures and restructuring efforts.

Some better-ranked stocks in the medical products industry include Hill-Rom Holdings, Inc. (HRC), NuVasive, Inc. (NUVA), and Boston Scientific Corporation (BSX). Both Hill-Rom and NuVasive carry a Zacks Rank #1 (Strong Buy), while Boston Scientific carries a Zacks Rank #2 (Buy).

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