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Amid Headline Risk, Barclays Says St. Jude's Pipeline Underestimated


Barclays believes investors are underestimating St. Jude Medical, Inc. (NYSE: STJ)’s pipeline and growth potential in future periods as it is working to close its merger with Abbott Laboratories (NYSE: ABT) in the fourth quarter.

The brokerage noted that the merger synergies are conservative and the company says the allegations of Muddy Waters/Medsec that the allegations are without merit.

“Overall, we think that STJ is a good deal for ABT and a strategic fit, and that the STJ deal close in the 4Q and improvements in STJ's results next year can catalyze ABT's stock,” analyst Matthew Taylor wrote in a note.

Meanwhile, St. Jude reported third quarter EPS of $0.99 versus consensus $1.01 on revenue of $1.499 billion, slightly above consensus of $1.497 billion. The analyst says the results are “good enough” given top-line stability and low expectations for the company headed into the quarter.

“[G]iven continued strength in Neuro and AF, and improved growth in Cardio (which grew 12%, 17%, and 7% respectively), we expect STJ's top-line growth will turn around once STJ receives MRI labels for its pacers (2H16E) and ICD's/CRT-D's (1H17E),” Taylor noted.

Taylor has an Equal-Weight rating on the stock, with a price target of $83.

At time of writing, shares of St. Jude were up 0.76 percent to $79.30.

Latest Ratings for STJ

Jul 2016WedbushDowngradesOutperformNeutral
Jul 2016Leerink SwannDowngradesOutperformMarket Perform
May 2016BarclaysDowngradesOverweightEqual-Weight

View More Analyst Ratings for STJ
View the Latest Analyst Ratings


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Posted-In: Barclays Matthew Taylor Muddy WatersAnalyst Color Earnings News Short Sellers Analyst Ratings

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