Global medical devices company, St. Jude Medical, Inc. (STJ), has announced preliminary results for the fourth quarter of 2014 (ended Jan 3, 2015). The company’s board has also authorized a share repurchase program worth $500 million. St. Jude Medical is scheduled to report fourth-quarter and full-year 2014 financial numbers on Jan 28, before the opening bell.
Fourth-quarter revenues are estimated to grow 1% year over year to around $1.44 billion, which is in line with the current Zacks Consensus Estimate. On a currency neutral basis, revenues are projected to rise roughly 5% year over year, riding on strong momentum from the company’s CardioMEMS technology and Atrial Fibrillation business.
St. Jude Medical also declared preliminary fourth-quarter revenues from each product category, which were either within or above the company’s previously issued guidance range.
Cardiac Rhythm Management revenues are estimated to come in at $685 million, down 3% year over year (but up 1% on a currency neutral basis). Atrial Fibrillation revenues are projected to rise 12% year over year (17% on a currency neutral basis) to $283 million.
St. Jude Medical estimates total cardiovascular sales to decline 1% year over year to $347 million, but increase 3% on a currency neutral basis. Neuromodulation revenues, on the other hand, are projected to climb 8% year over year (10% on a currency neutral basis) to $124 million.
We note that the company’s top line incorporates a considerable negative impact from recent foreign currency movements. In fact, U.S. manufacturers such as St. Jude Medical that generate a significant portion of their revenues from overseas are being hurt by a strengthening U.S. dollar, which has benefited from more upbeat U.S. economic prospects compared to the rest of the world.
We feel that the strong U.S. dollar which is impacting the company’s revenues will also hurt its bottom line. Markedly, St. Jude Medical has been witnessing significant downward estimate revisions over the last 60 days. For 2015, eight estimates moved south over the last two months with only one upward revision during the same time frame, shrinking the Zacks Consensus Estimate by 1.4% to its current level of $4.16.
However, St. Jude Medical reaffirmed its fourth-quarter adjusted earnings in the previously issued guidance range of $1.02–$1.04 per share. The current Zacks Consensus Estimate of $1.03 lies within the guided range.
Currently, St. Jude Medical carries a Zacks Rank #3 (Hold).
Better-ranked medical products stocks include ICU Medical (ICUI), Conatus Pharmaceuticals (CNAT) and OraSure Technologies (OSUR). While ICU Medical sports a Zacks Rank #1 (Strong Buy), both Conatus Pharmaceuticals and OraSure Technologies carry a Zacks Rank #2 (Buy).
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