U.S. med tech firms' Q3 seen solid, as expected
By Kevin Drawbaugh
CHICAGO, Oct 14 (Reuters) - Large-cap U.S. medical device makers are expected to post solid third-quarter profit
growth, in line with Wall Street expectations and not likely to lift the group's already high stock prices.
The strong dollar remains a worsening drag on the export-rich group, as does pricing pressure from managed care. But
profits are estimated to be up 11 percent on average.
''Medical technology is a good sector in that the companies are well-financed and there is a nice flow of products, but it's
not as hot as it once was because a lot of people realize these are good stocks and the prices are up there,'' said Anne
Malone, medical technology analyst at Smith Barney.
Three big firms have already reported. Johnson & Johnson (JNJ) on Tuesday reported quarterly earnings of $0.64 per
share, exactly matching expectations and up 14.3 percent over the year-ago period. Strong quarterly earnings gains were
also reported by Abbott Laboratories Inc (ABT), up 13 percent, and Stryker Corp (SYK), up 24 percent over a year
ago.
Most companies would be pleased with profit growth in the teens to 20s, but in the $120-billion medical device business,
such performance is taken for granted, analysts said.
Proving the rule was Boston Scientific Corp, whose shares were punished last month after it said quarterly profits would
be up 20 percent over a year ago, not 30 percent as expected.
The only genuine laggard this quarter looks to be St. Jude Medical Inc (STJ), analysts said. St. Jude last month said it
would miss third- and fourth-quarter earnings estimates.
Meanwhile, med tech leaders such as Medtronic Inc (MDT) and Guidant Corp (GDT) are expected to post strong gains.
Finally, the end may be nearing for a protracted slump in under-performing small-cap med-tech issues, analysts said.
''There is a bit of a rebound here,'' said Goldman Sachs medical technology analyst Lawrence Keusch.
On the technology front, Keusch said much of the industry is focused on stents, the small tubes used to support the inner
walls of blood vessels weakened by disease. Guidant and Arterial Vascular Engineering Inc (AVEI) may have big fourth
quarters on sales of their new stents, analysts said.
Company Qtr EPS estimate Yr-ago EPS
Baxter International (BAX) Q3 $0.57 $0.50
Boston Scientific Q3 $0.44 $0.37
DePuy Inc (DPU) Q3 $0.29 $0.27
Guidant Q3 $0.33 $0.29
Medtronic Q2 $0.32 $0.27
St. Jude Q3 $0.23 $0.33
Sofamor Danek Group (SDG) Q3 $0.53 $0.42
U.S. Surgical Corp(USS - news) Q3 $0.43 $0.39
NOTE: EPS estimates are First Call means.
REUTERS |
