St. Jude Medical: Counting on International Growth

Wednesday, 05 Oct 2011 04:12 PM

By Tim Plaehn

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Medical technology and services provider St. Jude Medical (STJ) has provided investors with returns well above the overall market for the last 10 years. Now the company is looking outside the United States to keep that growth record going.

Based in Minneapolis, St. Jude Medical develops and manufactures cardiovascular medical devices. The company divides it business into four lines: atrial fibrillation, cardiac rhythm management, cardiovascular surgery, and neuromodulation. According to company literature, the total global market in these sectors is more than $17 billion per year. Cardiac rhythm management sales make up approximately half of St. Jude Medical revenues.

For the second quarter of 2011 the company reported revenues of $1.45 billion, up 10 percent from a year earlier. Adjusted net income was 85 cents per share, up from 79 cents. With the second quarter earnings release, management gave third quarter guidance of 74 cents to 76 cents per share. These numbers are well below the Wall Street estimate of 80 cents in effect at that time.

For the full year 2011, St. Jude Medical is expected to earn $3.27 per share, compared to earnings of $3.01 in 2010.

Growing internationally

The 2011 second quarter was the first time sales outside the United States were greater than domestic sales for St. Jude Medical. Year-over-year revenues in the United States were down 2 percent for the quarter while international sales improved by 23 percent.

The need for strong international sales growth can be seen from the recent European Regulatory Authority approval of a neurostimulation implant for the treatment of chronic migraine headaches. The technology has not yet been approved for use in the United States.

Recently, the analysts at Kaufman Brothers initiated coverage on STJ with a buy rating. However, the bulk of recent Wall Street analysts are neutral on the stock.

The company reports next on Oct. 19.

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