(STJ) Will St. Jude Beat Earnings this Quarter?

St. Jude Medical Inc. (STJ) is set to report its first-quarter 2013 results before the opening bell on Wednesday, Apr 17. Let us see how things are shaping up prior to the announcement.

In the last quarter, the medical device major posted a 2.22% positive earnings surprise on the back of strategic realignment initiatives to reduce operating expenses. However, organic revenue growth declined.

Factors to Consider this Quarter

New growth drivers such as an innovative product line along with restructuring efforts to streamline the underlying business will likely be accretive for STJ in the long term. The company has received a number of regulatory approvals for its latest offerings as well as initiated a number of clinical trials in the first quarter, which is encouraging.

While St. Jude’s business fundamentals remain strong, we are concerned regarding the uncertainty prevailing at the company’s core implantable cardiac defibrillators (ICD) business. Domestic sales are likely to remain dampened until the pending disputes involving the warning letter issued by the FDA for its Sylmar facility is resolved. Meanwhile, we expect international revenues to boost overall revenues.

However, we are cognizant about the ongoing stiff global austerity measures and difficult healthcare environment. Further, the Med-Tech medical devices tax is expected to impact margins, beginning this quarter.

Earnings Whispers?

Our proven model does not conclusively show that St. Jude is likely to beat earnings estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks Earnings ESP:  The Most Accurate estimate stands at 91 cents, while the Zacks Consensus Estimate is pegged at 92 cents. This comes to a difference of -1.09%.

Zacks  Rank #3 (Hold): St. Jude’s Zacks Rank #3 (Hold) lowers the predictive power of ESP. The Zacks Rank #3 together with -1.09% earnings ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies from the medical sector you may want to consider as our model shows they have the right ingredients to post an earnings beat this quarter:

NuVasive Inc. (NUVA), Earnings ESP of +18.18% and a Zacks Rank #1 (Strong Buy)

Coventry Health Care Inc. (CVH), Earnings ESP of +7.69% and a Zacks Rank #1 (Strong Buy)

Hanger Inc. (HGR), Earnings ESP of +8.00% and a Zacks Rank #2 (Buy)

COVENTRY HLTHCR (CVH): Free Stock Analysis Report

HANGER ORTHOPED (HGR): Free Stock Analysis Report

NUVASIVE INC (NUVA): Free Stock Analysis Report

ST JUDE MEDICAL (STJ): Free Stock Analysis Report

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