St. Jude Medical (STJ) took a nasty beating last month as their earnings outlook and several analyst downgrades. Today we are seeing the first upgrade – all the way to a buy. This is creating a short-squeeze as it passes above resistance and creates a fill-the-gap scenario.

October downgrades:

• Oct 22, 2009 10:11 AM FTN Equity Downgrades St. Jude Medical (STJ) to Neutral
• Oct 21, 2009 01:21 PM St. Jude (STJ) Spikes Higher as UBS Issues Mid-day Upgrade
• Oct 15, 2009 05:09 PM Barclays Starts Stocks in Medical Equipment Group: EW, COV, MDT, ZMH at Overweight, SYK, BCR at Underweight
• Oct 7, 2009 10:34 AM Canaccord Adams Downgrades St. Jude Medical Inc. (STJ) to Hold
• Oct 7, 2009 08:34 AM Brean Murray Downgrades St. Jude Medical (STJ) to Hold

Even so, we picked up shares in October, after the sell-off, and added to the position today as the the price broke above resistance. Technically this stock is poised to move higher and the fundamentals are showing a positive outlook.

According to Bloomberg:

St Jude Medical Inc (STJ) was rated new “Buy” at Morgan Joseph by equity analyst Bruce Jackson. The target price is $42.00 per share. Risks to attaining our price target include the timing and success of clinical trials, new product launch timing, availability of reimbursement, litigation, and healthcare reform…St. Jude Medical aims to deliver 15% EPS growth with a combination of new products, operating expense leverage, and share buybacks. Key factors in the diversified growth strategy are market share gains in cardiac rhythm management (CRM), continued growth in AF and neuromodulation, and acquired growth from Radi’s PressureWire.”

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Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.