St. Jude Medical

St. Jude Medical
St. Jude Medical (STJ – NYSE) is the most highly leveraged player in the rapidly expanding market for cardiac rhythm management (CRM) devices (better known as pacemakers and defibrillators), which account for 72% of the company’s total revenues. Within CRM, the high-powered segment continues to show very solid growth prospects. Given the exceptional quality and predictability of STJ’s expected growth, we think social investors would be well advised to be acquainted with the stock.
St. Jude develops and manufactures pacemakers and implantable cardioverter defibrillators (ICDs) for treating cardiac rhythm disorders; electrophysiology catheters; cardiology/vascular access devices; mechanical and tissue heart valves; and connectors for coronary bypass surgery. The company’s products are sold virtually worldwide.
New devices combining cardiac resynchronization therapy with a backup high-power defibrillator (CRT-D) have shown remarkable success in treating chronic heart failure (CHF) patients. Demand for CRT-D devices has grown rapidly, but the market for these devices is still hugely under-penetrated at just 15%. Meanwhile, the company has expanded its share of the low-powered pacemaker market from 20% to 25% over the last several years.
As with most healthcare stocks, the principal risks for St. Jude are regulatory and legal. The sheer size of the CHF market opportunity and the extent to which St. Jude’s future earnings growth is leveraged to it means product launch delays could hurt STJ stock. Fortunately, the company is on track to enter the lucrative CHF market as early as this May.