Device maker St. Jude Medical (STJ) slid 6% on Tuesday on news that a doctor had reported an “adverse event’ with one of the company’s defibrillators. But Canaccord Genuity analyst Jason Mills is “suspicious” about the claim that there was a problem with a defibrillator lead in one of the Durata devices.
“This report was filed by a physician, who at this point is anonymous, as is his/her institution. What�s more, St. Jude was not notified of this report or of the alleged incident, notwithstanding that it allegedly occurred in mid-April. It is strange to us not only that the event was never reported to the company (according to management) but also that the MAUDE report was filed by a physician. MAUDE reports are filed by the manufacturer the vast majority of the time. Key opinion leaders with whom we spoke on Tuesday had not heard about this report either, and the way in which it came to light � especially from an as-yet-unnamed physician � seemed suspicious as well.”
Mills notes that the report could be problematic for the stock if it is confirmed, but that investor should not be quick to sell.
“We recommend investors exercise patience near term and would consider adding to positions when the dust settles with respect to the alleged Durata externalization report (discussed below), even if that means buying the stock a bit higher than current trading levels. We believe STJ�s current valuation already incorporates a moderate degree of pessimism regarding Durata specifically and STJ�s ICD growth outlook in general.”
No comments:
Post a Comment