Medtronic (NYSE:MDT) posted stronger-than-expected U.S. sales growth for its implantable cardioverter defibrillators, buoying shares of ICD rival Boston Scientific (NYSE:BSX).
Medtronic’s U.S. ICD sales grew 3.9% during its fiscal 2014 2nd quarter ended Oct. 25, rising to $427 million compared with $411 million during Q2 2013. International ICD sales also grew, rising 2.9% to $286 million, for worldwide ICD sales growth to $713 million, or 3.5%.
"Second-quarter revenue from ICDs was $713 million, an increase of 4 percent on a constant currency basis in a market that continues to show a trend toward stabilization," Medtronic said.
Leerink Swann analyst Michelle Antalffy estimated that the overall U.S ICD market grew 3.4% during the quarter, a 4-year high-water mark.
"In our view, better-than-expected U.S. ICD sales will be of particular focus this morning as we now believe the U.S. ICD market grew 3.4% in the quarter – the 1st quarter of growth since 1Q10 and the first quarter of this level of growth since 3Q09," Antalffy wrote in a note to investors this morning. "To us, this is encouraging for all ICD manufacturers – including [Boston Scientific] and [St. Jude Medical]."
BSX shares were up 1.4% to $11.73 apiece today, but STJ shares ticked down 0.3% to $56.67 each as of about 10 a.m.
Medtronic posted profits of $902.0 million, or 89¢ per share, on sales of $4.19 billion for the 3 months ended Oct. 25. That’s a profit increase of 39.6% on 2.4% sales growth.
Adjusted to exclude 1-time items, earnings per share were 91¢, a penny ahead of consensus expectations on Wall Street.
"Our 2nd-quarter revenue growth was in line with our outlook for the year, and we are performing at or better than the market in almost every one of our business lines," chairman & CEO Omar Ishrak said in prepared remarks. "This quarter also represented another quarter where our overall organization delivered consistent, dependable growth, with strong performances in some areas offsetting challenges in other parts of our business."
Medtronic affirmed its outlook for the rest of fiscal 2014, saying it still expects to report EPS of $3.80 – $3.85 on sales growth of 3% to 4% and adjusted EPS growth of 6% to 8%.
"As we look ahead, we are on the verge of bringing a number of new therapies to market over the coming quarters," Ishrak said. "Innovative therapies have fueled growth in our industry for decades and will remain a central element to our success. However, to realize the full potential of medical technology, we will need to continue the work we have started to expand our capabilities and offerings, to improve the value of these offerings to various healthcare system stakeholders, and to localize these offerings to individual markets around the globe, thereby transforming ourselves from being primarily a device provider today into the premier global medical technology solutions partner of tomorrow."