Medtronic Meets Estimates

However, revenue comes in just under the analyst consensus.
Publish date:

Updated from Aug. 18


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first-quarter earnings rose 18%, matching Wall Street's estimates, although revenue slipped slightly below the analysts' consensus.

The Minneapolis-based medical devices company said first-quarter earnings rose to $529.7 million, or 43 cents, from $450.4 million, or 37 cents a share, a year earlier, on revenue of $2.35 billion.

Revenue rose 14% to $2.35 billion from $2.06 billion.

The Thomson First Call consensus for the first quarter was a profit of $523.9 million, or 43 cents a share, on sales of $2.39 billion.

Shares slipped 10 cents, ot 0.2%, to $49.49 in premarket trading Thursday.

The company returned to its habit of matching Wall Street estimates after producing fourth-quarter results three months ago that beat the analysts' EPS consensus by 2 cents. For the previous eight quarters, Medtronic had matched Wall Street's EPS estimates.

"Medtronic's quarterly performance continues to demonstrate the benefit of a broad and diversified portfolio of businesses," said Arthur D. Collins Jr., the company's chairman and chief executive. "Even though significant investments continue to be made in order to sustain future growth, this quarter's results reflected improved financial leverage."

Robert L. Ryan, Medtronic's chief financial officer, said he was "comfortable" with the consensus analysts' predictions of second-quarter EPS of 45 cents and revenue of $2.48 billion. For the full fiscal year, he expects the earnings growth rate to exceed the revenue growth rate. He repeated the company's motto that Medtronic seeks to achieve 15% growth in both revenue and earnings over any five-year period.

Medtronic's first quarter was paced by a 31% sales growth in implantable cardioverter defibrillators (ICDs), which are surgically implanted into patients and which deliver an electrical charge to slow down a dangerously rapid heartbeat. However, the ICD program could be affected by a preliminary decision from a federal health care agency in late September on whether the Medicare program will accept more patients for ICDs, the company said.

In addition, William A. Hawkins, president and chief operating officer, said Medtronic is "on track" to seek European approval for a drug-coated arterial stent during the third quarter of Medtronic's fiscal year -- between November 2004 and January 2005.

Johnson & Johnson

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Boston Scientific

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sell these stents overseas as well as in the U.S.

Medtronic and



are working these stents, which prop open arteries that have been cleared of plaque through a procedure called angioplasty.

The stents are wire mesh tubes inserted after the plaque has been dispersed, allowing blood to flow freely and reducing the risk of clogging that could cause strokes or heart attacks. These devices, also known as drug-eluting stents, release a chemical periodically to reduce the risk of the artery reclogging. These stents are supplanting uncoated, or bare metal, stents, which now account for only 20% of total arterial stent sales in the U.S.

Hawkins said the best-case scenario for its Endeavor drug-coated stent in the U.S. would be submitting an application to the Food and Drug Administration in the summer of 2005. If the company is required to conduct additional tests, the application would be filed within the first three months of 2006, Hawkins said.

Medtronic's financial report was issued after stock markets had closed Wednesday.