Medtronic Dn 7% After Goldman Took Co.
Off Select List
Dow Jones Newswires
By Donna Fuscaldo
NEW YORK -- Despite expectations that Medtronic Inc.'s (MDT) will
report strong fiscal fourth-quarter results Wednesday, shares of the medical
technology company fell more than 6% Tuesday after Goldman Sachs & Co.
took the stock off its select list, analysts said.
Goldman took the Minneapolis company off the list, which is pushing shares
lower, said Dr. David Gruber, senior vice president, equity research, at
Lehman Brothers Inc. Goldman substituted Medtronic with competitor
Guidant Corp. (GDT), he added.
Kurt Kruger, managing director at Banc of America Securities, said investors
now see Guidant, whose stock price has collapsed in recent days, as a
bargain and are taking money out of Medtronic.
"I don't subscribe to that position," he said, "but there is commentary out
today where people are proposing that investment idea." Kruger added that
Goldman is among those proposing that idea.
Guidant provides products and service for treating cardiovascular and
vascular diseases. The Indianapolis company has been aggressive in its stent
business and is a direct competitor to Medtronic.
Medtronic shares were recently down 3 3/16, or 6.3%, at 47 1/8 on volume
of 3.8 million, compared with a daily average of 3.5 million.
An analyst who did not want to be identified for this story said the stock is
indeed down on the Goldman action. There doesn't seem to be any other
reason, he said, adding that Medtronic is doing well in its core businesses.
Guidant was recently up 1 1/8, or 2.3%, at 50 5/16 on volume of 835,300
shares, versus a daily average of 1.6 million.
Guidant's share price has been under pressure of late. The medical company's
stock finished the trading day Monday down 3.6%, or 1 13/16, at 49 3/16.
Last Thursday, after news that Johnson & Johnson's (JNJ) Cordis Corp. unit
received Food and Drug Administration approval for its BX Velocity
coronary artery stent, and Boston Scientific Corp. (BSX) received Europe's
CE Mark approval for its NIR with SOX Monorail, a coronary stent with a
rapid-exchange delivery system, shares of Guidant descended as much as
11.7%. The stock finished the day at 51.
Guidant is hurting for a number of reasons, said Banc Of America's Kruger.
The Johnson & Johnson announcement that it has returned to the stent market
after an absence, hurt Guidant's shares but was not the only reason for its
recent decline, he said.
"The whole stent market is being viewed as not that attractive and that in itself
is putting pressure on Guidant," he added.
Medtronic is a tightly managed company that will probably produce, as
expected, 26 cents a share for the fourth quarter, Kruger said.
"They have valiantly defended against the aggressive attack of Guidant, who
unleashed a new defibrillator," he said. "They held back the fear that they
would give up a lot of ground to Guidant."
Kruger hopes that the stent results will be "impressive, enough to suggest
Guidant is getting a run for its money." He added that Medtronic's neuro
business should be strong for the fourth quarter.
Officials at Medtronic did not return calls seeking comment.
-Donna Fuscaldo; Dow Jones Newswires; 201-938-5174
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Buy GDT becauseit is hurting. No logic there.
Jack |
