ANALYST OFFERS 2007 DEVICE MARKET OVERVIEW

In a 2007 device industry overview, Merrill Lynch Research forecasts a rebound in the market for "high-power" devices, which treat heart failure or sudden cardiac death, Merrill Lynch Research analyst Katherine Owen said.

There should be increased mergers and acquisitions activity within the medical technology sector, making St. Jude Medical an "attractive acquisition target," she said.

The worldwide high-power device market was up 1 percent year over year in the third quarter of 2006, "suggesting a possible stabilization following several quarters of weaker than expected sales," Owen said. "We assume a gradual acceleration in high-power revenue during 2007 with full year growth pegged at 6 percent If our forecast is in the ballpark, it could drive improving investor sentiment regarding the longer term outlook."

According to Owen, key factors driving stronger high-power device sales growth include:

A sizeable decrease in the negative press surrounding high-power device safety;

Increased market development efforts; and

Sales force expansions by Medtronic and St. Jude.