Choppy Forecast

The earnings season isn't starting out well for medical device companies.

St. Jude Medical Inc. missed its quarterly profit target as orders from hospitals slowed. Or as CEO Daniel Starks says in a statement, those dreaded "macro economic factors" made for an unpleasant surprise.

But at least one analyst thinks St. Jude's sales slump may be due to more micro rather than macro trends.

After calling around to some hospitals and purchasing groups, Robert W. Baird analyst Lawrence Neibor says he thinks there's still demand for devices, particularly those used in heart patients.

"Generally, people who need a cardiovascular procedure face a dire outcome if they don't get it," Neibor says. "It's not an elective procedure."

So even though St. Jude's news brought down the shares of rivals Boston Scientific Corp. and Medtronic Inc. today, Neibor doesn't expect the same type of disappointing quarterly results from those companies. St. Jude's stock plunged 13 percent to close at $33.40 a share. Shares of Boston Scientific dropped 1.7 percent and Medtronic fell by less than 1 percent.

After one-time items, St. Jude will earn no more than 58 cents a share, compared with the company's prior forecast of as much as 63 cents. The announcement was made before release of the company's full earnings report, which is expected later this month.

"One data point doesn’t make a trend but it does point out that the recovery in med-tech and hospitals may be at a minimum choppy," says Miller Tabak analyst Les Funtleyder.