St. Jude Medical Hits New Lifetime High - Analyst Blog

Shares of major medical devices manufacturer St. Jude Medical Inc. STJ reached a new lifetime high of $71.90 in mid-day yesterday. Shares of the company eventually closed at $70.32 on the same day, reflecting a market cap of $19.9 billion.

The closing price representing a solid one-year return of 54.2%, which is much higher than the S&P 500 return of roughly 25.0% as well as returns of 22.9% and 39.0% depicted by the company's peers Medtronic, Inc. MDT and Boston Scientific Corporation BSX, respectively.

Catalysts for Growth

Shares of St. Paul, MN-based St. Jude Medical started escalating following the announcement of completing its acquisition of privately-held CardioMEMS, Inc. at the beginning of last month. With the closure of the CardioMEMS acquisition, St. Jude Medical expects accelerated growth in its cardiovascular segment.

In Sep 2010, St. Jude Medical had acquired a 19% stake in CardioMEMS for $60 million, with an exclusive option to buy the remaining 81% of the company for $375 million. Following the FDA clearance of the CardioMEMS HF System in May this year, St. Jude Medical exercised its option to acquire the Atlanta-based company.

The CardioMEMS HF System is a first-of-its-kind FDA-approved heart failure monitoring device that has been proven to significantly reduce heart failure-related hospitalizations. It has set a new treatment paradigm for heart failure that reduces the need for hospitalizations and improves the quality of life for patients.

The CardioMEMS HF System has already obtained the CE Mark approval in the EU. St. Jude Medical now plans to initiate the system's strategic launch in the U.S.

Recently, St. Jude Medical also received the 2014 Innovation Award at Cardiostim 2014, the 19th World Congress in Cardiac Electrophysiology and Cardiac Techniques for its Nanostim leadless pacemaker.
    
A congress committee of electrophysiologists has chosen St. Jude Medical's Nanostim leadless pacemaker for the award being the most innovative product in electrophysiology and cardiac technique.

The Nanostim leadless pacemaker measures less than 10% of the size of a conventional pacemaker and can be implanted directly into the heart by a non-surgical procedure (through femoral vein with a steerable catheter), unlike conventional pacemakers, which require a more invasive surgery.

Last year, Nanostim pacemaker obtained CE Mark approval in Europe. After its approval, the pacemaker has been implanted in patients located in the U.K., Germany, Italy, Czech Republic, France, Spain, and the Netherlands.

Earnings Numbers

St. Jude Medical posted a 4.3% rise in adjusted net earnings per share to 96 cents for the first quarter of 2014 from 92 cents a year-ago. With this, earnings beat the Zacks Consensus Estimate by a penny and met the company's guidance of 94–96 cents per share for the quarter.

Revenues grew about 2.0% to $1,363 million for the quarter, exceeding the Zacks Consensus Estimate of $1,355 million as well as the company's own guided range of 1,280 to $1,360 million. Unfavorable foreign currency translation reduced revenues by roughly $25 million.

Guidance

For full year 2014, St. Jude Medical upgraded its revenues guidance to the range of $5,610 to $5,760 million from the prior range of $5,600 million to $5,750 million. It also upgraded its adjusted earnings per share guidance to $3.95–$4.00 from the prior range of $3.94–$3.99. The current Zacks Consensus Estimates for earnings per share and revenues for the year are pegged at $3.98 and $5,700 million, respectively.

Currently, St. Jude carries a Zacks Rank #3 (Hold). A better-ranked stock in the medical products industry is Nxstage Medical, Inc. NXTM, which carries a Zacks Rank #1 (Strong Buy).