ST. JUDE MEDICAL STANDS OUT IN 'FLAT' ICD MARKET, ANALYST SAYS

St. Jude Medical's $271 million third-quarter revenue from implantable cardioverter-defibrillators (ICDs) suggests "it not only retained the two market share points it gained from the competition last quarter but it also modestly advanced," Lazard Capital Markets analyst Alexander Arrow said Oct. 19.

"St. Jude is a share gainer in a flat market," Arrow said, noting that some investors believed hospital inventory management was to blame for Medtronic's flat sales and that this weakness would be transient. "Instead, we believe Medtronic, beset by sales-force personnel losses, may have failed to regain the share it lost," Arrow said. "If this is confirmed by Medtronic sales data to be reported next month, it would mean St. Jude has an even larger piece of a smaller pie, which bodes well for it if 2007 brings about even a modest return to growth."

Pacemakers and atrial fibrillation device revenues "were bright spots in the quarter and made up for shortcomings in neurostimulators from a delay in European sales force hiring," Arrow said. "We believe pacemaker sales of $248 million, an increase of 7 percent year-over-year, benefited from developing-nations growth."

Fourth-quarter 2006 catalysts include "potentially positive results of the highly anticipated clinical trial to use 'T-wave alternans' to help identify ICD patients," Arrow said. "Risks include a longer U.S. ICD market depression if public perception of ICDs cannot be restored in six months, or if one of the developmental disruptive ICD technologies changes the market."