Reuters: Global Markets: St Jude Medical outlook lags Wall Street views

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St Jude Medical outlook lags Wall Street views Jul 18th 2012, 15:29 By Debra Sherman Wed Jul 18, 2012 11:29am EDT (Reuters) - St. Jude Medical Inc reported lower quarterly sales in its key cardiac rhythm management (CRM) unit on Wednesday and dialed back its outlook for the current period and full year, sending its shares sliding 5.4 percent. During a conference call with analysts, company executives said they saw softer utilization in CRM, atrial fibrillation and cardiovascular markets. Shares of St. Jude, the largest maker of heart devices after Medtronic Inc, were trading at $37.12 at late morning; they were among the most actively traded stocks on the New York Stock Exchange. "We have not been able to predict the bottom of the (CRM) market, so we are determined to be conservative in the outlook that we've expressed," Chief Executive Daniel Starks told a conference call. Joanne Wuensch, an analyst with BMO Securities, said she had been concerned that sales of implantable heart defibrillators, known as ICDs, would be weak and undermine quarterly results. "The ICD number wasn't bad. It was some of the commentary during the call that I was not prepared for," said Wuensch, who has an "outperform" rating on the stock. Executives said they now expect the CRM market to fall 3 percent to 4 percent in 2012, instead of the "low single digits" they had previously forecast. They expect to gain half a percentage point of global market share this year; previously they had forecast gaining a half to a full point of share. Management may be taking a cautious tone in order to reset Wall Street's expectations so that the company can exceed expectations later, Wuensch said. The company said it expected third-quarter earnings per share of 80 cents to 82 cents, excluding items, while analysts were expecting 83 cents. St. Jude forecast 2012 earnings per share, excluding items, at $3.40 to $3.45, which is slightly below the average Wall Street estimate of $3.46. In a telephone interview, Chief Financial Officer John Heinmiller said management reduced its outlook because of negative foreign exchange factors, slower growth in Europe and other markets, and generally weaker macroeconomic conditions. In the second quarter, net earnings rose to $244 million, or 78 cents per share, from $241 million, or 72 cents per share, a year earlier. Excluding items, earnings were 88 cents per share. On that basis, analysts on average were expecting 87 cents, according to Thomson Reuters I/B/E/S. Sales fell to $1.41 billion from $1.45 billion, slightly weaker than the $1.43 billion that Wall Street analysts had expected. Sales of cardiac rhythm management products, which include implantable heart defibrillators, or ICDs, fell 6 percent to $746 million. Of that total, ICD sales were $459 million, down 4 percent. Sales of pacemakers were $287 million, down 9 percent. Cardiovascular sales fell 1 percent to $340 million. Sales of products used for procedures to treat atrial fibrillation were $218 million, a 5 percent increase, while neuromodulation product sales rose 2 percent to $106 million. "The worry is that their other markets -- atrial fibrillation and neuromodulation -- won't offset the weakness in CRM," said JMP Securities analyst Jose Haresco. (Reporting by Debra Sherman; Editing by Gerald E. McCormick, Lisa Von Ahn and Tim Dobbyn) Link this Share this Digg this Email Reprints

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