Strong dollar expected to undercut medical device company earnings by 6% this year

Recent med tech earnings calls have been rife with complaints about the impact of a surging dollar on American companies' bottom line. As one of the country's large exporting industries, the medical device industry has been hit by the currency appreciation, which makes exports more expensive and imports cheaper. Bloomberg Intelligence says that the stronger dollar will cut U.S. medical device company earnings by an average of 6%. That's why the gap between actual and adjusted earnings (which excludes the effects of exchange rates) has been widening of late. Bloomberg says Abbott ($ABT) and St. Jude Medical ($STJ) are the device companies that are most vulnerable to the rising currencies. St. Jude plans to implement a financial maneuver to hedge against, or offset, some of the impact. Unfortunately for the medical device industry, with the American economy improving, and low growth in Europe and a Greek "grexit" weighing down the euro, the dollar is likely to stay strong. If the Federal Reserve increases rates this summer, as many expect, that will cause the dollar to rise even more. More

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