This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Don't Overlook Problems at St. Jude

NEW YORK (TheStreet) -- Say what you want about Wall Street's "unpredictability," but when investors' minds are made up about a company, there's often little that can change that sentiment. It goes both ways. If you're on the Street's good side -- like St. Jude Medical (STJ - Get Report) appears to be -- it's a great position to be in. Or is it?

While St. Jude has enjoyed years of solid performances in the medical devices industry against rivals like Johnson & Johnson (JNJ) and Medtronic (MDT), its execution has been anything but flawless. St. Jude's Riata and Durata leads, made to help prevent heart failures, have been failing, thus hurting the company's reputation.

These at-home leads should help carry electrical impulses to the heart and provide information from the heart back to the devices. However, overwhelming reports of malfunctions due to premature insulation failure not only resulted in product recalls, but also generated class-action claims.

Making the situation even more dreadful, the company is now operating under several written warnings from the Food and Drug Administration. On top of that, there are now worries about the company's product pipeline, which lacks the growth potential of Medtronic.

Despite constant streams of negative news, the stock is perched near its 52-week high, which suggests Wall Street cares very little about these details and has made up its mind. While this is bad news for the bears, which have waited for a better entry point on the stock, the bulls shouldn't count their chicks just yet, either.

It's true the company beat third-quarter revenue estimates. In fairness, I was impressed by St. Jude going toe-to-toe with Johnson & Johnson, especially in areas like atrial fibrillation, which posted a solid 10% (constant currency) year-over-year growth. That St. Jude missed Johnson & Johnson's mark by only 1% shows the potential there is in this business.

However, considering the gloomy picture I've just outlined, I don't believe St. Jude's overall revenue performance, which grew just 1% year-over-year, supports the optimistic outlook reflected in the stock price.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
STJ $76.20 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs