Medtronic gains surprise analysts

The world’s biggest maker of heart-rhythm devices, said fourth-quarter sales of pacemakers and defibrillators rose, surprising analysts.

Defibrillator sales at Medtronic gained 1.5% to $755m (€586.4m) in the three months ended Apr 26, the first increase since the same quarter in 2010.

Revenue from pacemakers climbed 2.6% to $505m, the first gain since the company introduced an MRI-safe device at the end of 2011. The company employs close to 2,000 people in Ireland with most of the company’s employees working at the facility in Galway, including over 100 dedicated to research.

The increased sales helped boost the quarter’s revenue 3.8% to $4.46bn from $4.3bn a year earlier, the company said yesterday. Profit excluding one-time items of $1.10 a share beat by 7 cents the average of 24 analysts’ estimates.

“Overall, they gained pretty substantial market share in defibrillators and pacemakers,” said Jason McGorman, an analyst at Bloomberg Industries in Princeton, New Jersey.

“They were the only company that grew ICD revenue year-over-year.

“People were expecting low-to mid-single digit sales declines for US ICDs, because that’s what the trend has been for the overall market.”

The company forecast earnings of $3.80 to $3.85 a share for fiscal 2014, bracketing the $3.84 a share average of 24 analysts’ estimates compiled by Bloomberg.

Net profit for the quarter fell to $969m, or 95 cents a share, from $991m, or 94 cents, a year earlier.

The company gained share in all of its businesses, chief executive Omar Ishrak said. Demand for spinal products and defibrillators in the US both increased for the first time in four-and-a-half years, he said.

“This is noteworthy, especially as these businesses have been an impediment to our overall growth profile. This is another step in establishing credibility and delivering consistently over an extended period of time.”

While the markets for heart rhythm devices and spinal products have stopped declining, they haven’t resumed expanding, Mr Ishrak said. Medtronic was able to grow because of the introduction of new products and the reorganisation of the sales force, he said.

- Bloomberg