Medtronic's Endeavors Look Good

Medtronic (NYSE: MDT  ) closed out its fiscal year quite nicely, thanks in part to FDA approval of its drug-eluting stent, Endeavor.

Fourth-quarter revenue was up a solid 18% year over year. The company saw double-digit gains in all divisions except its cardiac rhythm segment, which registered more modest growth of 6%. Unfortunately, it is Medtronic's largest division, contributing more than a third of the company's revenue. Still, 6% growth isn't too shabby, especially since the company is still dealing with the recall of its implantable cardioverter-defibrillator (ICD) leads. Medtronic estimates its ICD market share has rebounded to more than 50% since the recall.

The U.S. launch of recently approved Endeavor helped push worldwide stent sales up 56%. Medtronic that estimates it ended the quarter with more than 20% of the U.S. market. The good news is that cardiologists aren't showing much brand loyalty to Johnson & Johnson (NYSE: JNJ  ) or Boston Scientific (NYSE: BSX  ) , enabling Medtronic to capture so much of the market in such a short time. The bad news is that Abbott Labs (NYSE: ABT  ) is hot on its heels; keeping that market share may not be as easy as capturing it was.

Earnings were flat year over year in the quarter, but that was partially because of a tax gain last year and charges associated with Medtronic's acquisition of NDI Medical this year. Excluding all the charges from both quarters, earnings were up 15% year over year.

Medtronic is looking for year-over-year revenue growth of 11% to 15%, and earnings per share 13% to 16% higher than last fiscal year's non-GAAP EPS. Higher margins and lower selling, general, and administrative costs relative to revenue should help the bottom line grow faster than revenue. While that looks pretty impressive, Fools should keep an eye on drug-eluting stent sales after Abbott launches its own such product. There's probably quite a bit of sales baked into the guidance, and which company will come out ahead in the stent skirmish is a big unknown at this point.