Shares of St. Jude Medical (NYSE:STJ) clawed back some of the value lost yesterday in what 1 waggish analyst termed a “Greek tragedy.”
STJ shares closed down 3.3% yesterday at $39.96 when the company revealed a $56 million writedown after a Greek distributor failed to pay up for an estimated 2 years worth of sales.
Calling it a "Greek tragedy," Citigroup analyst Matthew Dodds wrote a research note to investors that St. Jude waited longer than other companies to write down its Greek receivables.
"[St. Jude] has not disclosed how long it has been since this distributor has paid them, but our math suggests $56 million is at least 2 years’ worth of sales in Greece based on competitor sales basis (pre-crisis)," Dodds wrote.
The Greek government, the International Monetary Fund and the European Union inked a deal in February to resolve that country’s massive debt crisis.
"This agreement, among other macroeconomic and factors specific to the distributor, negatively impacted the solvency and liquidity of the company’s Greek distributor, raising significant doubt regarding the collectability of our outstanding accounts receivable balance of approximately $56 million," St. Jude said in the SEC filing. "We have also experienced delays in the collectability of receivables in certain European member states, particularly in Southern Europe. Although we still expect to fully collect these receivables, there can be no assurances that additional negative economic disruptions and slowdowns in Europe may result in us not fully collecting these receivables, adversely affecting our cash flows, financial position and results of operations. Additional prolongation of the economic disruptions in Europe may negatively impact reimbursement rates and procedural volumes and adversely affect our business and results of operations."
STJ shares were trading at $40.91 as of about 11:50 today, up 2.4% on the day.
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