Wall Street’s overall take on sales and earnings forecasts for medical device makers this year is too high, according to Goldman Sachs (NYSE:GS) analyst David Roman, who sees The Street’s 4th-quarter top-line estimates as split evenly among companies with upside and downside.
"We see consensus revenue estimates as relatively balanced, with upside to numbers for 9 companies in our coverage, downside to 8 companies and in-line quarters for 3 companies," Roman wrote in a research note. "However, turning to the outlook for 2012, we are modeling revenue estimates below consensus for 16 out of 20 companies in our coverage. Overall, we think sluggish end market utilization, continuing and possible intensifying pricing pressure, and limited sizable new product cycles will lead to downside on the top and bottom line."
A stronger dollar has also had an adverse impact on most of the companies under Roman’s bailiwick, he wrote.
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The 9 companies with "upside to consensus revenue estimates" for the 4th quarter, at least according to the Goldman analyst, are Baxter, Covidien, Hospira, Intuitive Surgical, Mako Surgical, Medtronic, St. Jude Medical, Thoratec and Varian Medical Systems. Companies with downside to consensus revenue estimates are Boston Scientific, CareFusion, CR Bard, Edwards Lifesciences, Hill-Rom Holdings, NuVasive, Stryker and Zimmer Holdings, Roman wrote. His revenue forecasts for Becton Dickinson, Zeltiq Aesthetics and Volcano are in line with consensus views, he added.
The split disappears in the full-year forecast, however.
"Specifically, we see consensus revenue estimates as too high for 16 companies in our coverage (Baxter, Becton Dickinson, Boston Scientific, CareFusion, Covidien, CR Bard, Edwards Lifesciences, Hill- Rom Holdings, Intuitive Surgical, NuVasive, St. Jude Medical, Stryker, Thoratec, Varian Medical Systems, Volcano and Zimmer Holdings), and too low for only four companies (Hospira, MAKO Surgical, Medtronic and Zeltiq Aesthetics)," he wrote.
The impending medical device tax will have less of an impact, Roman added, noting his belief that "companies can pass through less of the tax to customers."
Here’s how Roman sees 4th-quarter earnings per share shaking out, compared with the consensus view on Wall Street:
| Goldman vs. The Street: Q4 EPS | |||
|
Company |
The Street | Goldman | |
| Baxter (NYSE:BAX) | $1.17 | $1.17 | |
| Becton Dickinson (NYSE:BDX) | $1.17 | $1.21 | |
| Boston Scientific (NYSE:BSX) | $0.08 | $0.07 | |
| CareFusion (NYSE:CFN) | $0.44 | $0.44 | |
| Covidien (NYSE:COV) | $1.04 | $1.04 | |
| C.R. Bard (NYSE:BCR) | $1.68 | $1.68 | |
| Edwards Lifesciences (NYSE:EW) | $0.59 | $0.58 | |
| Hill-Rom (NYSE:HRC) | $0.54 | $0.53 | |
| Hospira (NYSE:HSP) | $0.47 | $0.49 | |
| Intuitive Surgical (NSDQ:ISRG) | $3.33 | $3.31 | |
| MAKO Surgical (NSDQ:MAKO) | ($0.15) | ($0.13) | |
| Medtronic (NYSE:MDT) | $0.84 | $0.84 | |
| NuVasive (NSDQ:NUVA) | $0.22 | $0.20 | |
| St. Jude Medical (NYSE:STJ) | $0.84 | $0.84 | |
| Stryker (NYSE:SYK) | $1.03 | $1.01 | |
| Thoratec (NSDQ:THOR) | $0.33 | $0.34 | |
| Varian Medical Systems (NYSE:VAR) | $0.75 | $0.77 | |
| Volcano Corp. (NSDQ:VOLC) | $0.05 | $0.03 | |
| Zeltiq (NSDQ:ZLTQ) | ($0.09) | ($0.10) | |
| Zimmer (NYSE:ZMH) | $1.34 | $1.34 | |
| Goldman vs. The Street: 2012 EPS | |||
|
Company |
The Street | Goldman | |
| Baxter (NYSE:BAX) | $4.62 | $4.59 | |
| Becton Dickinson (NYSE:BDX) | $5.80 | $5.76 | |
| Boston Scientific (NYSE:BSX) | $0.47 | $0.44 | |
| CareFusion (NYSE:CFN) | $1.82 | $1.76 | |
| Covidien (NYSE:COV) | $4.26 | $4.18 | |
| C.R. Bard (NYSE:BCR) | $6.62 | $6.56 | |
| Edwards Lifesciences (NYSE:EW) | $2.78 | $2.75 | |
| Hill-Rom (NYSE:HRC) | $2.48 | $2.45 | |
| Hospira (NYSE:HSP) | $2.49 | $2.47 | |
| Intuitive Surgical (NSDQ:ISRG) | $14.17 | $14.28 | |
| MAKO Surgical (NSDQ:MAKO) | ($0.49) | ($0.39) | |
| Medtronic (NYSE:MDT) | $3.45 | $3.43 | |
| NuVasive (NSDQ:NUVA) | $1.01 | $1.04 | |
| St. Jude Medical (NYSE:STJ) | $3.52 | $3.40 | |
| Stryker (NYSE:SYK) | $4.11 | $4.09 | |
| Thoratec (NSDQ:THOR) | $1.63 | $1.65 | |
| Varian Medical Systems (NYSE:VAR) | $3.98 | $3.88 | |
| Volcano Corp. (NSDQ:VOLC) | $0.30 | $0.24 | |
| Zeltiq (NSDQ:ZLTQ) | ($0.42) | ($0.44) | |
| Zimmer (NYSE:ZMH) | $5.21 | $5.08 | |
Here’s a look at his top-line expectations versus The Street’s:
| Goldman vs. The Street: Q4 revenues (000) | |||
|
Company |
The Street | Goldman | |
| Baxter (NYSE:BAX) | $3,578 | $3,605 | |
| Becton Dickinson (NYSE:BDX) | $1,881 | $1,881 | |
| Boston Scientific (NYSE:BSX) | $1,909 | $1,883 | |
| CareFusion (NYSE:CFN) | $915 | $913 | |
| Covidien (NYSE:COV) | $2,922 | $2,932 | |
| C.R. Bard (NYSE:BCR) | $749 | $743 | |
| Edwards Lifesciences (NYSE:EW) | $447 | $445 | |
| Hill-Rom (NYSE:HRC) | $385 | $381 | |
| Hospira (NYSE:HSP) | $954 | $989 | |
| Intuitive Surgical (NSDQ:ISRG) | $484 | $487 | |
| MAKO Surgical (NSDQ:MAKO) | $28 | $30 | |
| Medtronic (NYSE:MDT) | $4,045 | $4,076 | |
| NuVasive (NSDQ:NUVA) | $148 | $147 | |
| St. Jude Medical (NYSE:STJ) | $1,403 | $1,407 | |
| Stryker (NYSE:SYK) | $2,222 | $2,210 | |
| Thoratec (NSDQ:THOR) | $107 | $108 | |
| Varian Medical Systems (NYSE:VAR) | $633 | $649 | |
| Volcano Corp. (NSDQ:VOLC) | $93 | $93 | |
| Zeltiq (NSDQ:ZLTQ) | $22 | $22 | |
| Zimmer (NYSE:ZMH) | $1,162 | $1,159 | |
And here’s Roman vs. The Street on full-year 2012 revenues:
| Goldman vs. The Street: Q4 revenues (000) | |||
|
Company |
The Street | Goldman | |
| Baxter (NYSE:BAX) | $14,320 | $14,023 | |
| Becton Dickinson (NYSE:BDX) | $7,995 | $7,833 | |
| Boston Scientific (NYSE:BSX) | $7,661 | $7,458 | |
| CareFusion (NYSE:CFN) | $3,656 | $3,639 | |
| Covidien (NYSE:COV) | $11,904 | $11,792 | |
| C.R. Bard (NYSE:BCR) | $3,032 | $2,996 | |
| Edwards Lifesciences (NYSE:EW) | $2,009 | $1,981 | |
| Hill-Rom (NYSE:HRC) | $1,645 | $1,623 | |
| Hospira (NYSE:HSP) | $3,912 | $4,012 | |
| Intuitive Surgical (NSDQ:ISRG) | $2,048 | $2,037 | |
| MAKO Surgical (NSDQ:MAKO) | $129 | $133 | |
| Medtronic (NYSE:MDT) | $16,553 | $16,629 | |
| NuVasive (NSDQ:NUVA) | $619 | $610 | |
| St. Jude Medical (NYSE:STJ) | $5,815 | $5,655 | |
| Stryker (NYSE:SYK) | $8,749 | $8,520 | |
| Thoratec (NSDQ:THOR) | $458 | $445 | |
| Varian Medical Systems (NYSE:VAR) | $2,851 | $2,819 | |
| Volcano Corp. (NSDQ:VOLC) | $398 | $380 | |
| Zeltiq (NSDQ:ZLTQ) | $117 | $118 | |
| Zimmer (NYSE:ZMH) | $4,565 | $4,424 | |
