St. Jude Medical's STJ investor day on Friday went into overtime as significant time was spent on pipeline areas outside of core CRM. In Citi's view, the company's long-term pipeline assumptions is very optimistic and harkens back to BSX's 2005 investor day presentation. Management made a significant shift away from its core CRM products, as growth opportunities in this area look limited. Near-term STJ does have room to gain share in ICDs but is likely to lose share in pacemakers.
STJ's two catheter-based valve platforms and a renal denervation device are in early stages and likely to have IP issues with leaders Medtronic MDT and Abbot Laboratories ABT. STJ also has several efforts underway in neuromodulation – migraine, Parkinson's and depression – that are also likely to face IP challenges. Of the 3, only Parkinson's represents a near-term opportunity.
There are no changes to Citi's model estimates or share price. It still doesn't share management's view of a return to double-digit revenue growth given the challenged markets and debatable pipeline prospects.
STJ is trading higher at $43.21
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