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In this article, I will feature one medical device company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

St. Jude Medical (NYSE:STJ) develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of St. Jude Medical's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Michael RousseauGroup PresidentOct 3-4171,000Yes20,382 shares89.4%
Denis GestinPresidentOct 3-4137,000Yes6,257 shares95.6%
Donald ZurbayCFOOct 412,000Yes9,731 shares56.7%

There have been 320,000 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of St. Jude Medical's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
October 2013320,0000
September 20134,2000
August 201324,6000
July 2013171,9220
June 201300
May 201310,8700
April 201315,0720
March 201300
February 2013217,3430
January 20136,9580

There have been 770,965 shares sold and there have been zero shares purchased by insiders this year. The month of October has seen the most insider selling.

Financials

St. Jude Medical reported the second-quarter financial results on July 17, with the following highlights:

Revenue$1.4 billion
Net income$115 million
Cash$1.2 billion
Debt$3.6 billion

Outlook

As of July 17, St. Jude Medical expects its consolidated net earnings for the third quarter of 2013 to be in the range of $0.88 to $0.90 per share and for full-year 2013 consolidated net earnings to be in the range of $3.70 to $3.73, increasing the lower end of the range by $0.02.

Competition

St. Jude Medical's competitors include Boston Scientific Corporation (NYSE:BSX), Edwards Lifesciences (NYSE:EW), and Medtronic (NYSE:MDT). Here is a table comparing these companies.

CompanySTJBSXEWMDTIndustry Average (Medical Appliances & Equipment)
Market Cap:15.84B15.94B8.31B54.85B84.56M
Employees:15,00024,0008,20046,659244.00
Qtrly Rev Growth (yoy):-0.01-0.010.070.020.16
Revenue:5.44B7.12B1.97B16.66B54.31M
Gross Margin:0.730.660.750.750.56
EBITDA:1.74B1.63B519.70M5.64B1.80M
Operating Margin:0.270.130.230.29-0.01
Net Income:634.00M-827.00M399.30M3.56BN/A
EPS:2.12-0.613.423.47N/A
P/E:26.06N/A21.6315.8525.63
PEG (5 yr expected):1.632.251.632.201.59
P/S:2.912.244.213.292.69

St. Jude Medical's P/S ratio is above the industry average.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
BSX30,000632,431
EW6,000497,668
MDT4,800466,277

Only St. Jude Medical has seen intensive insider selling during the past 30 days.

Conclusion

There have been three different insiders selling St. Jude Medical and there have not been any insiders buying St. Jude Medical during the past 30 days. All three of these insiders decreased their holdings by more than 10%. St. Jude Medical has an insider ownership of 0.10%.

There are 11 analyst buy ratings, nine neutral ratings, and four sell ratings with an average price target of $53.72. St. Jude Medical is trading at a P/E ratio of 26.06 and a forward P/E ratio of 13.90. The company has a book value of $13.52 per share and the stock has a dividend yield of 1.81%.

Before entering short St. Jude Medical, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst price targets and the intensive insider selling activity.

Source: Insiders Are Selling St. Jude Medical