St. Jude Medical (STJ) Stock Down Despite Positive Earnings Report

NEW YORK (TheStreet) -- St. Jude Medical Inc (STJ) shares are down 2.9% to $61.36 in trading on Wednesday.

The stock dropped despite the cardiovascular medical device manufacturer increasing year over year revenue and beating analysts consensus estimates.

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St Jude Medical posted an EPS of 96 cents, beating Captial IQ first quarter estimate of 95 cents per share. Year to year quarterly revenue was up 2% to 1.36 billion, matching analysts estimates.

St. Jude also issued in line guidance ranges of 99 cents to $1.01 EPS for the second quarter and between $3.95 and $4 for the year.

TheStreet Ratings team rates ST JUDE MEDICAL INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ST JUDE MEDICAL INC (STJ) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • STJ's revenue growth has slightly outpaced the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ST JUDE MEDICAL INC has improved earnings per share by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ST JUDE MEDICAL INC increased its bottom line by earning $2.50 versus $2.40 in the prior year. This year, the market expects an improvement in earnings ($3.98 versus $2.50).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 2.5% when compared to the same quarter one year prior, going from $120.00 million to $123.00 million.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 48.24% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: STJ Ratings Report
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