Medtronic’s Earnings Preview

Medtronic reports earnings tomorrow. The AP has a preview:

OVERVIEW: The acquisition of Boston Scientific Corp. and Guidant Corp. during the period changed Medtronic’s competition landscape slightly. Guidant had always been second to Medtronic in the market for implantable defibrillators _ devices implanted in the body to regulate heart rhythm _ while Medtronic seeks to grab share in the drug-coated stent market currently dominated by Boston Scientific and Johnson & Johnson Inc.
Medtronic, the world’s largest medical device maker, gained share in the defibrillator market following Guidant’s product recalls last year, but must hold onto those gains now that Boston Scientific is working to revamp its acquired product lines.
BY THE NUMBERS: Although Medtronic did not issue fourth-quarter guidance, it has fiscal-year earnings guidance of $2.20 to $2.23 per share, and revenue guidance between $11.1 billion and $11.6 billion. Given total adjusted earnings per share of $1.59 and revenue of $8.23 billion for the first three quarters, that implies a fourth-quarter estimate of 61 cents to 64 cents per share earnings on revenue of $2.87 billion to $2.92 billion. Analysts surveyed by Thomson Financial estimate earnings of 62 cents per share on revenue of $3.08 billion.
ANALYST TAKE: Lehman Brothers analyst Bob Hopkins said the upcoming earnings report is an issue of concern. The analyst estimates earnings per share of 61 cents for the quarter. Hopkins, who rates Medtronic “Overweight,” said as long as Medtronic can keep defibrillator sales at $760 million or above, the stock may avoid weakness.
Merrill Lynch’s Katherine Martinelli, with her “Buy” rating, considers Medtronic a preferred heart device stock given the premium price of competitor St. Jude Medical Inc.
WHATS AHEAD: Medtronic and other medical device makers are likely to unleash their lobbyists on Washington this summer to dispute steeper-than-expected proposed reimbursement cuts by the Centers for Medicare and Medicaid Services on such products as stents, defibrillators and pacemakers.
STOCK PERFORMANCE: Shares of Medtronic fell 12 percent to close the fiscal quarter ended April 28 at $50.12 on the New York Stock Exchange. Over the previous four quarters, shares have slid 5 percent.

Posted by on May 22nd, 2006 at 11:44 am


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