CHICAGO, April 1, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Real Estate Investment Trusts Industry, including: Medtronic (NYSE: MDT), Boston Scientific (NYSE: BSX) and St. Jude Medical (NYSE: STJ).
A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/50398/Medical+Devices+Industry+Outlook+%96+March+2011
With a slew of new products, the Big Three players – Medtronic (NYSE: MDT), Boston Scientific (NYSE: BSX) and St. Jude Medical (NYSE: STJ) -- in the $6.5 billion implantable cardioverter defibrillator ("ICD") market are well positioned to gain market share, despite the challenging business environment. However, we do acknowledge the fact that a soft CRM market may be a drag on these stocks. The prevailing macroeconomic factors, pricing pressure, austerity measures and the impact of health care reform are expected to continue to weigh on the CRM market through 2011.
Among the names above, Medtronic, the undisputed leader in the MedTech space, has a diversified presence in Cardiovascular, Neuro, Spinal, Diabetes and ENT and boasts an attractive pipeline. Although the company lost some U.S. ICD market share in the most recent quarter due to competition, new products should gradually contribute to growth and help it maintain/gain ICD share.
The long-awaited issue of the FDA warning letters, relating to Medtronic's Mounds View facility and manufacturing unit in Puerto Rico, was finally resolved in March 2011, paving the way for the U.S. approval and launch of new products including the much-anticipated Protecta ICD device. While Protecta ICD has yet to be cleared in the U.S., it continues to perform very well in Europe.
We believe that the recent approval of the REVO MRI SureScan pacemaker and Arctic Front catheter should provide some support to Medtronic's CRM business. Its spinal segment should also benefit gradually from the recent product launches.
Moreover, Medtronic plans to adopt restructuring initiatives (including workforce reduction) to sustain long-term growth. The company is also blessed with strong cash flows which it prudently uses for maximizing shareholder value. Medtronic is active on the acquisition front and is investing in emerging markets, which it considers an increasingly important growth driver.
Boston Scientific has maintained its leadership position in the global drug eluting stent ("DES") market with 35% share (46% in the US market). Importantly, its pipeline DES product Promus Element is shaping up to be a major driver of its stent business. Moreover, we are also encouraged by Boston Scientic's acquisition of asthma-treatment company Asthmatx, which will enable it to target the pulmonary devices area.
Boston Scientific has undertaken a series of management changes and restructuring initiatives that are expected to contribute to the bottom line moving forward. The company plans to expand its footprint in the emerging markets by reinvesting the savings from restructuring efforts. In this context, we reckon the company's divestiture of its Neurovascular business as a smart move, enabling it to prepay a portion of the debt and invest in high growth markets.
St. Jude is poised to grow its market share in the CRM segment (especially in ICDs), driven by its new Fortify and Unify lines of devices. Launch of several products (including the quadripolar CRT systems) in the U.S. and Europe should boost the company's CRM market share in 2011. Moreover, we are optimistic about the emerging opportunity in the intravascular imaging market, enabled by the company's LightLab acquisition in July 2010.
St. Jude's EnSite mapping system for diagnosis and treatment of arrhythmia continues to be the key driving force in atrial fibrillation. Also, its $1.3 billion acquisition of heart devices maker AGA Medical Holdings will eventually make St. Jude a clear leader in the structural heart market. The company expects the acquisition to help its sales grow at a low double-digit rate in 2011.
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