Thursday September 18 7:17 PM EDT
St. Jude Medical seen rebounding in 1998
NEW YORK, Sept 18 (Reuter) - Wall Street analysts said that despite lowered third and fourth quarter earnings expectations announced Thursday by St. Jude Medical Inc, they expected the company to rebound in 1998 after integrating recent acquisitions.
``It's a great company and by next year they should begin on the uphill road,'' said Herman Saftlas, an S&P Equity Group analyst.
The St. Paul, Minn., medical devices company said Thursday its earnings for the last two quarters of 1997 would fall well below published analysts' estimates, largely because of continuing integration of its May purchase of Ventritex Inc.
It added it planned to take a charge against earnings in the third or fourth quarter between $32 million and $42 million to appropriately position its cardiac rhythm management division.
St. Jude said it expected per-share earnings to be in the range of the low $0.20's in the third quarter, in contrast to the First Call consensus analysts' estimate of $0.36.
For the fourth quarter, the company said earnings would likely be in the mid-$0.30's per share, excluding the expected charge against earnings. That compares with the First Call estimate of $0.45.
``It's just taking them longer than expected to digest new acquisitions,'' Saftlas said, including that of Daig Corp in mid-1996.
St. Jude made its long-awaited $365 million purchase of Ventritex in order to acquire its technology in implantable cardiovascular defibrillators, or ICDs.
It said Thursday the ``ramp up'' of its training of sales representatives for the devices had been slower than expected, adding an unfavorable foreign exchange factor and lower than expected European sales also would trim earnings the remainder of 1997.
``St. Jude has an incredible challenge in front of it in terms of integrating its acquisitions and everyone was expecting the third quarter to be difficult,'' said Dain Bosworth analyst Rachel Scherer.
``I think it will have things in place for a strong comeback in 1998,'' Scherer said, but added she was considering lowering her 1998 per-share earnings estimate to $1.90 or $2.00 from her original estimate of $2.30.
The First Call consensus analysts' estimate is $2.15.
St. Jude did not make any earnings projections for 1998. |
