We've spent a lot of time in recent months discussing drug-eluting stents and the booming stent market, focusing on market leaders Johnson & Johnson
With all this talk of stents, it's easy to forget that Medtronic is the world's leading medical device maker. And it's still growing. For the third quarter, the company reported earnings of $0.38 per share, a 9% jump, on revenues that were up 15% to $2.2 billion. It managed impressive growth over several key product lines, including spinal, implantable defibrillators, diabetes, and vascular. Sales of key implantable cardioverter defibrillators (ICD) -- devices that slow rapid heartbeats -- were up 17%, but that was short of the company's expectations.
Its stock took a hit last week when the company warned that quarterly revenues would fall below the high end of its own estimates, mostly because of slowing ICD sales. One should consider as well that Medtronic gained $93.8 million in revenue due to currency effects. There's little doubt that uneven ICD sales have contributed to choppy trading in Medtronic shares over the past year.
For all that, there's no doubting this company's dominant market position, or the 75% gross margins that go with it. Looking ahead, Medtronic will begin Phase III trials for Endeavor, its own drug-coated stent, and is on track to receive marketing approval for the product in Europe towards the end of the year, with U.S. approval expected in late 2005.
Back in November, Fool W.D. Crotty asked about Medtronic, "Is there anything not to like?" I'm still looking for an answer. Meanwhile, the stock looks more than reasonable at less than 30 times this year's earnings.
Give us your take on the Medtronic discussion board.
Fool contributor Jeff Hwang owns no shares in any of the aforementioned companies.