Device maker St. Jude Medical (STJ) is down 3.7% this afternoon as the company’s cautious guidance appears to be spooking investors.
St. Jude’s second quarter report contained some positive highlights: earnings narrowly beat expectations, as the company’s ICD sales were stronger than expected and management said it had gained market share. St. Jude has struggled in recent months because of safety concerns related to leads attached to its ICDs.
But guidance was another story, as BMO Capital Markets analyst Joanne Wuensch noted.
“But things got tricky when management started to discuss guidance. It talked about a more conservative view of the cardiac rhythm management (CRM) market (down 3%-4%, versus previous guidance for low-single digits) as well as its share in that market (gain � point of market share versus � to 1 point previously). It also talked about softer utilization, not just in CRM, but in atrial fibrillation (AF) and cardiovascular division (CVD) as well, largely in Europe, leading to a more reserved 2H of the year. And then there was FX, which frankly was anticipated by us and many on the Street: looking for $1.20 to $1.25 per euro (versus $1.28 to $1.33) and 78 to 83 yen per $1 (versus 80 to 85), lowering 2H12 revenue by $35 to $40 million and EPS by 4 to 5 cents.”
Wuensch nonetheless rates the stock at outperform as the company’s pipeline is strong and its valuation remains attractive.
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