Reuters: Global Markets: St Jude Medical offers weak outlook, shares drop

Reuters: Global Markets Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

St Jude Medical offers weak outlook, shares drop Apr 18th 2012, 19:22 By Debra Sherman Wed Apr 18, 2012 3:22pm EDT (Reuters) - St Jude Medical Inc (STJ.N), which has made headlines in recent weeks over problems with some of its leads used with implantable heart defibrillators, posted better-than-expected quarterly earnings on Wednesday, but issued a weak forecast for the second quarter that sent shares lower. Chief Executive Dan Starks told analysts on a conference call he was confident that the company would win new business in the market for cardiac rhythm management (CRM) devices, despite sluggish demand. "We fully expect to continue to gain global CRM market share," he said. Starks predicted St Jude would gain about 1 percent of market share in the global CRM market, valued at about $11 billion, and characterized market dynamics as "stable." Earlier this month, St Jude halted sales of its QuickSite and QuickFlex leads, wires that carry electricity from defibrillators to the heart, due to concerns the insulation could wear away and expose the wires. Around the same time, HeartRhythm, a prominent medical journal, published an article by Dr. Robert Hauser of the Minneapolis Heart Institute that took a critical look at St Jude's Riata lead line that was recalled in 2011. The piece concluded that the St Jude product failed at a higher rate than Medtronic Inc's (MDT.N) lead, prompting St Jude to ask for a retraction of the article, drawing even more attention to the issue. Chief Financial Officer John Heinmiller declined to discuss those events in an interview on Wednesday. He pointed instead to several indicators which he said reflected St Jude's relative strength in its market position despite the controversy. He said the lead-to-port ratio, which looks at the number of leads sold relative to the number of ICDs or ports, was positive in the first quarter. Heinmiller also noted that the average selling prices were stable in the first quarter. "That all points to momentum," he said. FORECAST DISAPPOINTS Shares of St Jude fell as much as 3.4 percent on Wednesday after the medical device maker forecast second-quarter earnings of 86 to 88 cents per share, which was weaker than many Wall Street analysts had expected. St Jude shares also fell sharply last week amid concerns that the recall of its Riata lead may cause doctors to curb their use of the company's products. St Jude, which also makes heart valves and spinal cord stimulators, on Wednesday raised its earnings forecast for full-year 2012 to $3.44 to $3.49 per share. "We really think there is value to erring on the side of being conservative, if we are going to err at all," Starks told analysts, noting that the CRM market has been somewhat volatile in recent years. Goldman Sachs analyst David Roman, who has a "neutral" rating on the stock, said second-quarter guidance was well below what he was forecasting. "It is not clear to us what is the driver of the weaker-than-expected projections for the second quarter," he wrote in a research note. "This may raise some concerns about the sustainability of trends with respect to market share gains and puts greater pressure on a second half (2012) acceleration." Jeff Jonas, an analyst with Gabelli Health and Wellness Trust Mutual Fund, which owns St Jude shares, said he viewed the lead controversy as "a distraction that will be put to rest over time." In the first quarter, total net earnings fell to $212 million, or 67 cents per share, from $233 million or 71 cents per share in the year-ago period. St Jude recorded charges of $29 million, primarily related to a restructuring within its cardiac rhythm management business. Excluding one-time items, earnings were 86 cents per share, 3 cents above the average Wall Street forecast, according to Thomson Reuters I/B/E/S. Sales rose to $1.395 billion from $1.376 billion, but sales of implantable heart defibrillators slipped. Its sales of cardiac rhythm management products, including heart pacemakers and implantable heart defibrillators, or ICDs, were $735 million, down 4 percent. Sales of ICDs and ancillary products totaled $450 million, down 3 percent. Cardiovascular sales, which primarily include vascular and structural heart products, rose 3 percent in the quarter to $336 million. Sales of products used to treat atrial fibrillation rose 13 percent to $221 million in the first quarter, while sales of neuromodulation products increased 12 percent to $103 million. Shares were down 2.8 percent at $38.00 near midday on the New York Stock Exchange, off an earlier low at $37.73. (This story corrects name of lead that has been recalled in paragraph 11) (Reporting By Debra Sherman in Chicago; Editing by John Wallace, Maureen Bavdek and Matthew Lewis) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions