St. Jude Medical Inc. (STJ) reported adjusted EPS of $1.03, which was in line with the Zacks Consensus Estimate. EPS increased 4% year over year driven by a modest 1.2% rise in total sales to $1.44 billion, which also met the Zacks Consensus Estimate.
At constant currency (cc), total sales increased 5% on a year-over-year basis. International sales declined 2.6% (up 4% at cc) to $761 million, while U.S. sales increased 5.8% to $678 million in the quarter.
Segment Results
Cardiac Rhythm Management (CRM) sales decreased 2.8% (up 1% at cc) year over year to $685 million. U.S. sales were almost flat at $336 million while international sales fell 5.6% (up 1% at cc) to $349 million in the said quarter.
In the CRM division, implantable cardiac defibrillator (ICD) sales declined 3.6% to $426 million, while pacemaker sales fell 1.5% to $259 million.
CardioMEMS HF systems sales were approximately $12 million in the quarter.
Atrial Fibrillation (AF) sales jumped 12.3% year over year (up 17% at cc) to $283 million. International sales grew 11% to $171 million, while U.S. sales increased 14.3% to $112 million in the quarter.
Cardiovascular sales declined almost 1% (up 3% at cc) to $347 million in the quarter. International sales plunged 10.1% to $214 million, while U.S. sales soared 18.8% to $133 million.
In the Cardiovascular division, vascular product revenues climbed 2.7% to $188 million. Meanwhile, structural heart product revenues decreased 4.8% to $159 million in the quarter.
Neuromodulation sales jumped 7.8% year over year to $124 million, driven by 21.2% surge in the U.S. sales and 2.4% increase in international sales.
Guidance
For the first quarter of 2015, St. Jude expects sales to grow in the range of 2% to 4% at cc. Foreign exchange volatility is expected to negatively impact sales by approximately $85 to $100 million. The Zacks Consensus Estimate for sales is currently pegged at $1.37 billion.
EPS for the first quarter is forecasted in the range of 90 to 92 cents, which is lower than the current Zacks Consensus Estimate of 97 cents.
For full-year 2015, St. Jude expects sales to grow in the range of 3% to 5% at cc. Foreign exchange volatility is expected to negatively impact sales by approximately $325 to $350 million. The Zacks Consensus Estimate for the same is currently pegged at $5.72 billion.
EPS is projected in the range of $3.95 to $4.00, which is lower than the current Zacks Consensus Estimate of $4.12.
Our Take
St. Jude’s fourth-quarter 2014 results reflect strong momentum at the company’s CardioMEMS technology and Atrial Fibrillation business. We believe that an expanding and innovative product portfolio, accretive acquisitions and aggressive share buyback programs will drive growth in 2015.
However, we feel that the strong U.S. dollar which is impacting the company’s revenues will also hurt its bottom line. Moreover, the prevailing tight spending environment remains a major headwind.
Zacks Rank
Currently, St. Jude has a Zacks Rank #3 (Hold).
Better-ranked stocks in the same sector are ICU Medical (ICUI), Phibro Animal Health (PAHC) and Nxstage Medical (NXTM). All the companies sport a Zacks Rank #1 (Strong Buy).
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