Medtronic fails to impress
Medtronic matches earnings forecast excluding charges, but misses sales projection with 8 percent jump.
NEW YORK (CNNMoney.com) -- Medtronic Inc. on Tuesday reported healthy gains in sales and earnings but analysts were disappointed by revenue growth.
The Minneapolis-based maker of medical devices reported an 8 percent jump in revenue to $3.1 billion and a 13 percent rise in net earnings to $675 million, for the first-quarter of its 2008 fiscal year, which ended July 27. Earnings per share, excluding one-time items, were up 13 percent to 62 cents, in line with Wall Street estimates.
But analysts had been expecting 9 percent growth in revenue.
Phillip Nalbone, analyst for RBC Capital Markets, said that Medtronic's quarterly earnings were "kind of a flabby performance."
Medtronic (down $0.16 to $52.86, Charts, Fortune 500) chief executive Art Collins, in a Web cast with analysts, said he would be stepping down from his job and handing the helm to chief operating officer William Hawkins, who is expected to be voted in as the new CEO at a shareholder's meeting on Thursday.
During the quarter, the company launched Prestige, a hinge-like implant for the neck, providing support and mobility for patients with diseased vertebrae.
In addition, advisors for the Food and Drug Administration in July voted in favor of approving the company's Bryan disc for the neck, though a final decision from the agency comes later.
Also, the company said it would buy the medical device maker Kyphon for $3.9 billion.
Looking forward, Collins said FDA advisors are expected in October to vote on the company's Endeavor drug-eluding stent for heart disease patients; there had been uncertainty about whether a vote would happen this year.
"That gives them a fighting chance of getting Endeavor approved and on the U.S. market this year," said Nalbone.
Medtronic said that sales in its largest product area, pacemakers, defibrillators and other devices to monitor heartbeats in heart disease patients, increased 7 percent to $1.2 billion, compared to the same period last year. As part of this, the company said that its ICD (implantable cardiac defibrillator) sales jumped 8 percent to $726 million for the first quarter.
Nalbone said that ICDs were "kind of weak" and "not quite up to expectations."
Also, the company's revenue for spinal implants jumped 12 percent to $644 million quarter-to-quarter, and cardiovascular revenues (including stents) grew 8 percent to $486 million.
Medtronic competes with medical devices makers Johnson & Johnson (down $0.16 to $61.67, Charts, Fortune 500), Abbott Laboratories (down $0.03 to $52.36, Charts, Fortune 500) and Boston Scientific (down $0.07 to $12.16, Charts, Fortune 500).