Once again we see a harsh lesson repeated in the market -- if a stock runs up too much, investors get really cranky about any perceived disappointments. Take the case of St. Jude Medical
All in all, though, results weren't bad. Sales were up 29% and earnings per share, after various sundry charges, were up about 24%. Sales growth was once again fueled by the red-hot ICD business where sales climbed 62% -- although that probably sounds good to most readers, it was actually a little light compared to analyst expectations. Growth was also strong in the atrial fibrillation business (a much smaller market) and up by single-digit amounts in cardiology and cardiac surgery.
I believe part of the lurking fear here is that St. Jude may find itself in the same boat as Boston Scientific
In the case of St. Jude, I believe that a fair portion of its growth came from supplanting Guidant as the back-up supplier to many medical facilities. When Guidant started having its troubles, customers were faced with the choice of giving all of their business to Medtronic
With Guidant apparently going to Boston Scientific, I would hope that Johnson & Johnson might at least consider St. Jude as a candidate. Not only is this a player in the ICD/pacemaker market, but I'm optimistic about the company's future in atrial fibrillation and neurostimulation. I'll grant that buying St. Jude won't be cheap, but take a quick look at J&J's growth rates and tell me that it doesn't need to do something.
For more medical-minded Foolishness:
Fool contributor Stephen Simpson owns shares of Johnson & Johnson, but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares).