Headquartered in St. Paul, MN, St. Jude Medical Inc. , a leading global medical device manufacturer recently announced the CE mark approval for the full-body magnetic resonance (MR) conditional labeling of the Proclaim Elite Spinal Cord Stimulation (SCS) System. It is a non-rechargeable SCS system that offers the functions of ‘St Jude Medical Burst’ and ‘tonic stimulation’ in one system.
A glimpse on the recent price movements of the stock reveals a stellar year-to-date return of 30%, way better than the Zacks categorized Medical Product sub-industry’s return of 0.65% and the S&P 500’s roughly 10.6%.
However, until Apr 2016, the company’s price performance had been unimpressive. Nevertheless, post the last reported quarter, the company’s shares grew roughly 2% till Friday’s close.
The CE mark would enable St. Jude medical to tap on the bountiful opportunities in the spinal cord stimulation and the neuromodulation markets. Per a research report by Markets and Markets, the niche market is expected to multiply at a CAGR of 11.2% globally, to reach a worth of $6.20 billion by 2020, a significant positive in our view.
St. Jude has been gaining prominence of late, courtesy of the latest European conformity of the Proclaim Elite SCS, which closely follows the declaration of encouraging results in the MOMENTUM 3 U.S. IDE Clinical Study, the largest left ventricular assist device (LVAD) trial in the world.
Notably, the latest regulatory progress provides patients in Europe an opportunity to undergo full-body MRI diagnostic scans, while retaining access to other Spinal Cord Stimulation treatments at one go, which is likely to enhance the company’s Neuromodulation business segment. In this regard, in the last reported quarter, Neuromodulation sales jumped 17% year over year at cc to $141 million, driven by an 18% surge in U.S. sales and a 14% increase in international sales.
We are upbeat on St. Jude Medical’s long-term expected earnings growth rate, currently pegged at 8.53%.On top of it, the stock promises an earnings yield of almost 5%, comparing favorably with the industry average of 0.96%. Meanwhile, a projected sales growth of 9.07% further instills confidence on the stock.
However, on the flipside, a dismal estimation trend remains a headwind. Notably, three estimates moved south in the last month, with no movement in the opposite direction. The current year estimate edged down by a penny to $4.02 in the last month. The company is also expected to face certain integration risks as a result of the planned merger with Abbott, adding to its woes.
Zacks Rank & Key Picks
Currently, St Jude Medical has a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader medical sector include Addus HomeCare Corp. (ADUS - Free Report) , LHC Group, Inc. (LHCG - Free Report) and HMS Holdings Corp. (HMSY - Free Report) . Addus HomeCare and LHC Group sport a Zacks Rank #1 (Strong Buy), while HMS Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Addus HomeCare has a long-term expected earnings growth rate of approximately 15%. Notably, the stock represents an impressive one-year return of almost 37.4%.
LHC Group has a long-term expected earnings growth rate of 15%. The company has returned almost 19.9% in the last three months.
HMS Holdings has an expected earnings growth of almost 14.3%. The company posted a promising year-to-date return of almost 51.3%.
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