Analysts: Recall of St. Jude Medical's Durata not likely, despite problems

December 19, 2012 by MassDevice staff

St. Jude Medical (NYSE:STJ) isn't likely to recall its next-generation Durata pacemaker leads despite a warning from the FDA, but the situation with the medical device company's flagship product could change any day, according to Wall Street analysts.

Although investors have already baked the downside from the warning into the share price, meaning some potential upside for STJ shares once the problems flagged in the watchdog agency's Form 483 warning are fixed, analysts from Leerink Swann and Jefferies & Co. told MassDevice.com today that the Durata situation is still fluid.

"The likelihood of a recall, based on what we know today, is fairly small," Leerink Swann's Danielle Antalffy told us. "Until the device actually starts failing in a real way, like what we saw with Riata, Durata is not going get pulled."

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"If one's being intellectually honest, the probability is still quite low, given what we know," agreed Jefferies analyst Raj Denhoy. "There are a lot of reasons to believe we could see something, some problem, down the road, but clinically the product is still performing quite well. The question is, will the FDA do something despite the clinical data being quite good?"

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