Updated from Nov. 17
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.
If all goes well, Medtronic could receive regulatory approval in early 2005. The company said it will present some midstage clinical trial data at a major U.S. cardiology conference in March.
Johnson & Johnson
sell drug-coated stents in the U.S. and in foreign markets.
also are working on drug-coated stents.
As for its most recent quarter. Medtronic said that its cardiac rhythm management businesses produced revenue of $1.1 billion, an 8% gain over the same period last year. This division includes primarily pacemakers and implantable cardioverter defibrillators (ICDs). Revenue from ICDS rose 17%, while pacemaker revenue fell 4%. ICDs are surgically implanted devices that deliver electrical shocks to control dangerously rapid heartbeats.
The biggest gain among Medtronic's divisions belonged to the group that includes products for the spine; ear, nose and throat; and surgical applications. This unit's revenue gained 25% over the same period last year, to $505.6 million.