St. Jude Medical Up on Affirmed Rating, Looming FDA Review Date

Jacob Harper  |

Medical devicemaker St. Jude Medical, Inc. (STJ) popped on Sept 6 following two separate pieces of good news. The FDA set a date to review their subsidiary product the Champion Heart Failure Monitoring System on Oct. 9, with general sentiment being that the device will be approved. At the same time, analytical firm Fitch Ratings reaffirmed the healthcare company’s debt rating at A, or “stable.”

The Heart Failure Monitoring System is 19 percent owned by St. Jude, who retain the right to buy the device outright. The device had previously been rejected by the FDA in Dec. 2011, though necessary revamps to labeling and efficacy issues seem to have rectified the problem. The device has $1 billion dollar potential.  

Prior to the FDA date being set, Fitch reaffirmed the company, and sees healthy margins going forward. Fitch believes St. Jude - well known for their pacemakers - will maintain relatively flat sales going forward this year, but their margins will continue to decrease, raising their free cash flow from $750 million to $850 million.

Looking further forward, things look rosy for St. Jude. The implementation of the Affordable Care Act, commonly known as “Obamacare,” is also expected to spur the company, as more Americans gain access to health insurance. Obamacare is expected to give a boost as well to St. Jude’s competitors Medtronic Inc. (MDT) and Boston Scientific (BSX) , who is having a stellar year.  

Like Boston Scientific, St. Jude isn’t doing too shabby this year either. They’re up 39.2 percent on the year.

On the day St. Jude was up 3.79 percent to hit $2.89 a share.


(image of pacemaker courtesy of WIkimedia Commons)

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