How St. Jude Medical Beat 2Q16 Wall Street Estimates



2Q16 takeaways

On July 20, 2016, St. Jude Medical (STJ) released its 2Q16 earnings. After the announcement, St. Jude Medical’s share price rose more than 1% from $80.2 on July 19. The company’s reported revenue and earnings exceeded analyst estimates by approximately 0.6% and 0.2%, respectively.

In 2Q16, St. Jude Medical earned revenues of ~$1.6 billion. It registered growth of ~10.8% on a YoY (year-over-year) basis. The currency translations negatively impacted sales by ~$6 million. 2Q16 sales exceeded analyst estimates of ~$1.5 billion. The company registered adjusted diluted EPS (earnings per share) of $1.06, which managed to marginally exceed the consensus earnings estimate of $1.058.

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In 2Q16, St. Jude Medical witnessed strong global LVAD (left ventricular assist device) sales whereas US CRM (cardiac rhythm management) sales continued to witness slow growth. Atrial fibrillation products witnessed sales growth of ~13%, driven by the continued adoption of the company’s ablation catheter portfolio. The launch of Encite Precision also witnessed growing demand.

For more on St. Jude’s business fundamentals, valuation, and growth drivers, read St. Jude’s Valuation Story: Growth Drivers and Future Trends.

St. Jude Medical’s peers Medtronic (MDT), Boston Scientific (BSX), and Johnson & Johnson (JNJ) reported revenues of about $7.6 billion, $2 billion, and $18.5 billion, respectively, in their most recent quarters.

Earnings results

St. Jude Medical reported net income of ~$275 million, representing ~17.6% year-over-year growth. The reported adjusted earnings per share grew around 0.4%. The company’s adjusted gross margins improved to 69.1% of total revenues versus the ~68.7% gross margin reported in the previous quarter.

Investors interested in St. Jude Medical can invest in the Guggenheim S&P 500 Equal Weight ETF (RSP), which has ~0.20% of its total holdings in STJ.

In the next part of this series, we’ll discuss the company’s latest analysts’ recommendations.


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