St. Jude launches $1B stock buyback after stock plunge
St. Jude Medical ($STJ) has authorized a $1 billion stock repurchase effort amid rumors that it's under the regulatory gun, a week after the company's shares took a dive over new concerns about the safety of its devices.
The buyback "demonstrates the confidence our board and management team have in the long-term prospects for St. Jude Medical," CEO Dan Starks said in a statement. The company says it has about 308 million shares outstanding at the moment.
After last year's recall of Riata ICD leads pilloried the companies profits, St. Jude faces fresh worry over Durata, the next-gen replacement. St. Jude has touted Durata as free of the erosion risk that plagued its predecessor, but a recent FDA letter chided the company for how it tests and manufactures the devices, sending its stock into a free fall. Furthermore, analysts warn that the embattled leads could get pulled from the market by mid-2013.
St. Jude, for its part, maintains that everything's fine, and the buyback would seem to be a sort of internal vote of confidence. This week, Starks told the Piper Jaffray investor conference that there's no "special risk" Durata will be yanked next year, and the company has said again and again that it has faith in the device's safety and efficacy.
Last quarter, amid a 22% earnings drop, St. Jude announced its plan to repurchase about $300 million in shareholder stock.
- read the announcement
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