A Rare Miss for Medtronic

Updated from Nov. 17

Medtronic(MDT Quote - Cramer on MDT - Stock Picks) shares fell sharply Thursday after reporting earnings late Wednesday that missed analysts' expectations, a rare occurrence.

Medtronic, which routinely matches or beats the Wall Street consensus, earned $535.7 million, or 44 cents a share, on revenue of $2.40 billion for the three months ended Oct. 29.

The consensus view of analysts polled by Thomson First Call was for a profit of $552.5 million, or 45 cents a share, on revenue of $2.46 billion for the second quarter of Medtronic's current fiscal year.

A year earlier, Medtronic earned $476.1 million, or 39 cents a share, on revenue of $2.16 billion.

Recently, shares were down $2.82, or 5.4%, to $49.50. More than 1.6 million shares -- about half the average daily volume -- had already changed hands.

For the quarter under way, Chief Financial Officer Robert Ryan said analysts have been predicting a third-quarter EPS range of 45 cents to 48 cents and a revenue range of $2.43 billion to $2.55 billion. "The lower end of the Street range appears reasonable," Ryan said.

The third-quarter consensus from Thomson First Call is EPS of 47 cents and revenue of $2.50 billion.

As for the full fiscal year, Ryan reiterated that EPS growth -- "at least 15%" -- will outpace revenue growth, which he pegs at 12% to 14%. He said an EPS range of $1.86 to $1.89 "appears reasonable" and a "$10-billion-plus" revenue prediction is a "solid estimate." The Thomson First Call consensus calls for an EPS of $1.90 and revenue of $10.2 billion.

Medtronic also announced that it has been told by European medical device regulators that the company has submitted all necessary information concerning its Endeavor drug-coated arterial stent. The regulators have completed on-site inspections of the company's manufacturing facilities in Ireland and California without finding any problems.

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