St Jude Medical Inc. (STJ): Today's Featured Health Care Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

St Jude Medical ( STJ) pushed the Health Care sector lower today making it today's featured Health Care laggard. The sector as a whole closed the day up 0.5%. By the end of trading, St Jude Medical fell $2.09 (-4.9%) to $40.85 on heavy volume. Throughout the day, nine million shares of St Jude Medical exchanged hands as compared to its average daily volume of 2.3 million shares. The stock ranged in price between $40-$40.95 after having opened the day at $40.07 as compared to the previous trading day's close of $42.94. Other companies within the Health Care sector that declined today were: USMD Holdings ( USMD), down 13.9%, CytRx Corporation ( CYTR), down 11.7%, MEI Pharma ( MEIP), down 9.5%, and Sunshine Heart ( SSH), down 8.9%.
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St. Jude Medical, Inc. develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. It operates in four segments: Cardiac Rhythm Management, Cardiovascular, Atrial Fibrillation, and Neuromodulation. St Jude Medical has a market cap of $13.37 billion and is part of the health services industry. The company has a P/E ratio of 16.8, equal to the average health services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Shares are up 25.2% year to date as of the close of trading on Tuesday. Currently there are 17 analysts that rate St Jude Medical a buy, no analysts rate it a sell, and eight rate it a hold.

TheStreet Ratings rates St Jude Medical as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Graymark Healthcare ( GRMH), up 25%, Peregrine Pharmaceuticals ( PPHM), up 24.3%, Prana Biotechnology ( PRAN), up 18.9%, and InterMune ( ITMN), up 16.3%, were all gainers within the health care sector with Allergan ( AGN) being today's featured health care sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the health care sector could consider Health Care Select Sector SPDR ( XLV) while those bearish on the health care sector could consider ProShares Ultra Short Health Care ( RXD).

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