BUSINESSWEEK ONLINE : NOVEMBER 20, 2000 ISSUE
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Quickening the Pulse at St. Jude


Finally, St. Jude Medical ( STJ) is getting some respect. Although the maker of cardiovascular devices is No. 1 in mechanical heart valves and No. 2 in pacemakers, St. Jude hasn't quite commanded the lofty price-earnings ratios investors have bestowed on its peers--Boston Scientific, Guidant, and Medtronic. But the Food & Drug Administration has come to St. Jude's rescue. It has given swift and early approval to St. Jude's Photon DR, a dual-chamber implantable defibrillator for the treatment of rapid heartbeats.

St. Jude's stock, which dropped to 33 in May, has been on the rise. But analysts think St. Jude, now at 57, deserves an even higher p-e. With the FDA's fast action, ''we believe a 30 multiple, in line with the average range of the other large-cap cardiovascular companies, is reasonable for St. Jude,'' argues Matthew Dodds of SG Cowen Securities. That translates to 63 a share. With Photon expected to sell throughout 2001, Dodd says his overall sales estimate of $1.32 billion and earnings forecast of $2.10 a share for 2001 ''are on the conservative side.'' He rates St. Jude a ''strong buy.''

By GENE G. MARCIAL

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