Earnings Scorecard: St. Jude

Medical devices major St. Jude Medical’s (STJ) fourth-quarter 2011 adjusted earnings per share of 86 cents beat the Zacks Consensus Estimate by a couple of cents and exceeded the year-ago earnings of 75 cents.

Highlights from the Quarter

Profit (as reported) for the fourth quarter slipped roughly 21% year over year to $163.4 million (or 51 cents a share) as higher sales were overshadowed by lofty special charges.

Revenues rose 4% year over year to $1,406.9 million, beating the Zacks Consensus Estimate of $1,400 million. Double-digit growth across the company’s Atrial Fibrillation, Cardiovascular and Neuromodulation segments was partly masked by the decline in the core Cardiac Rhythm Management (“CRM”) division.

Revenues from the CRM division fell 4% year over year, indicating sustained softness in the U.S. ICD market. ICD revenues clipped 5% and pacemaker sales declined 4% in the quarter.

Atrial Fibrillation and Neuromodulation businesses posted healthy growth in quarter with revenues surging 13% and 12% year over year, respectively. Revenues from the cardiovascular franchise climbed 18%, backed by the contributions of AGA Medical.

We have discussed the quarterly results at length here: St. Jude Beats, Charges Hurt Net.

Agreement – Estimate Revisions

Estimates for St. Jude are on downswing following the fourth quarter results. Out of 22 analysts covering the stock, 2 have lowered their estimates for fiscal 2012 over the past week with none raising their forecasts. Over the past month, 18 analysts have truncated their forecasts for the year with 3 moving in the opposite direction.

Estimates for the first quarter elicit somewhat similar trend with 4 (out of 18 analysts) having chopped their estimates over the past 7 days with no reverse movements. There were 11 downward revisions over the past month coupled with a solitary opposite movement. The bearish sentiment reflects the impact of an unfavorable foreign exchange environment on earnings in 2012.  

Magnitude – Consensus Estimate Trend

There has been an increase of a penny in the estimate for fiscal 2012 over the past week. However, given a plethora of downward revisions, estimate for the year have fallen by a 7 cents over the past month.