Dennis,
I have not seen the research note on the downgrade. The item that I did see is MS stated that MDT did not have much upside.
I think the market is concerned with the brady pacing market. Below you will see that GDT stated they have seen a slowing in this market. The analyst maybe trying to figure out what is actually ocurring.
Dow Jones Business News
Guidant Sees Some Evidence Market for Pacemakers Slowing
Friday February 14, 1:39 pm ET
By Daniel Rosenberg
CHICAGO -- There is some evidence that growth in the overall pacemaker market is slowing, Guidant Corp. (NYSE:GDT - News) executives said Friday, but it will be another quarter before that becomes clear.
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In addition, they said in a mid-quarter conference call, the company's guidance won't need to be adjusted if the Centers for Medicare and Medicaid Services, or CMS, moves to reimburse a new group of patients for implantation with implantable cardiac defibrillator, or ICD, devices, saying approval is already built into guidance. A Medicare panel unanimously recommended Medicare reimbursement earlier this week, and CMS is expected to make a final decision within one to three months. The new patient group is indicated for ICD implantation under Guidant's own Madit II study.
Earlier Friday, Guidant reiterated its previous guidance for 2003 earnings between $1.85 and $2 a share and sales of $3.2 billion. It also reiterated guidance for first-quarter earnings between 54 cents and 60 cents a share and first-quarter revenue between $855 million and $895 million.
The question about pacemakers arose after competitors Medtronic Inc. (NYSE:MDT - News) and St. Jude Medical Inc. (NYSE:STJ - News) reported mid single-digit percentage sales growth for the devices in their most recent quarters. Guidant's own pacemaker sales rose 14% in the fourth quarter.
"When one looks at the Medtronic and St. Jude results, one can infer that the market is slowing somewhat," said Fred McCoy, president of Guidant's Cardiac Rhythm Management division, speaking during the call. "While perhaps there's some truth to speculation that (the pacemaker market) is slowing, we ought to wait for another quarter to confirm that."
He declined to say how Guidant's pacemaker sales were doing so far this quarter.
The company said it plans by the end of this quarter to submit an application to the Food and Drug Administration (News - Websites) for a cardiac resynchronization therapy, or CRT, pacemaker called Contak TR, and hopes to have the product approved by next year. Right now, Guidant's CRT device comes equipped only with an ICD, while competitor Medtronic sells both a CRT ICD and a CRT pacemaker. These devices treat patients with heart failure.
Guidant officials said during the call that the company can remain competitive in the European stent market despite the presence there of drug-coated stents by Johnson & Johnson and soon by Boston Scientific Corp. (NYSE:BSX - News) . |
