St. Jude Medical: Attractive At 35?

St. Jude Medical (STJ) was founded in 1976 and is headquartered in St. Paul, Minnesota, USA. Trailing twelve month 2010 net sales is 5.56 billion with 16,000 employees and a geographical scope extending to more than 100 countries.

The Companies four operating segments are Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF), and Neuromodulation (NMD). The primary products produced by each operating segment are: CRM – ICDs and pacemakers; CV – vascular products, which include vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories, and structural heart products, which include heart valve replacement and repair products and structural heart defect devices; AF – atrial fibrillation products which include EP introducers and catheters, advanced cardiac mapping, navigation and recording systems and ablation systems; and NMD – neurostimulation products, which include spinal cord stimulation and deep brain stimulation devices.

Management expects 2011 consolidated earnings per share to be in the range of $3.26 to $3.28, gross profit margins to be in the range of 74.0% to 74.5% and R&D as a percentage of net sales to be in the range of 12.5% to 13.0%. (Source: October conference call)

Here is one fair value view based on management’s financial track record focusing on the financials as they relate to fair value, followed by possible risks.

Fair values are based, in part, on the following: discounted cash flow, a modified Graham’s intrinsic value formula and a P/E analysis. The valuation model consists of two parts.
…Read the full article at SA (click here)….


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