May 20 (Bloomberg) -- Medtronic Inc.'s fiscal fourth- quarter profit beat analysts' estimates as defibrillator sales recovered from a recall and the heart stent Endeavor began selling in the U.S. Shares rose the most in almost three weeks.

Net income in the period ended April 25 was $812 million, the same as a year earlier, or 72 cents a share, the Minneapolis-based company said today in a statement. Adjusted profit of 78 cents a share beat analysts' estimates by a nickel.

Stent sales, propelled by U.S. approval of the drug-coated Endeavor in February, jumped 56 percent. Revenue from defibrillators and other heart rhythm devices, the company's biggest products, climbed 5.4 percent as Chief Executive Officer William A. Hawkins defended Medtronic, the world's largest maker of electronic heart devices, against growing competition and October's recall of defibrillator wires.

``All in all, it looks like it's a good quarter,'' said Jan David Wald, an analyst with Stanford Group Co. in Boston. ``For defibrillators, they demonstrated at least they could get back to where they were. For drug-eluting stents, they surprised us.''

Sales of stents, including Endeavor, rose to $251 million, the company said. Stents are tiny mesh tubes, sometimes coated with drugs, that prop open arteries after they're unclogged.

Medtronic climbed $1.08, or 2.3 percent, to $48.96 at 4:01 p.m. in New York Stock Exchange composite trading, the most since May 1. Medtronic dropped 6.6 percent in the 12 months before today.

Company's Forecast

The company forecast that revenue for fiscal 2009 would be $15 billion to $15.5 billion, or $2.94 to $3.02 a share, at current foreign exchange rates. The company stopped issuing quarterly forecasts last year.

The company's earnings were unchanged from a year earlier, when an IRS settlement added $129 million to income. Revenue in the quarter rose 18 percent to $3.86 billion. The increase came even as Medtronic in October recalled its Sprint Fidelis, the wires used to connect defibrillators to the heart. The product was linked to five deaths.

Medtronic's global share of defibrillators rose back above 50 percent, where it was before the recall, CEO Hawkins said in a telephone interview. He credited the company's marketing and its quick shift to another defibrillator wire, the Sprint Quattro.

Past the Recall

``We're now at the second quarter past the Fidelis situation and we're very pleased with our recovery,'' he said. ``We're just about back to where we were.''

The company also benefited from sales of artificial spinal discs, Medtronic's second-biggest product, which jumped 35 percent to $869 million.

The higher revenue was offset by almost $300 million in higher costs for manufacturing and marketing. The company also recorded $130 million for writedowns in asset value and hedging adjustments for foreign currency exchange rates. Medtronic took an after-tax charge of $50 million, or 4 cents a share, buying a company called NDI Medical that's developing therapies for incontinence.

Hawkins, who took over as Medtronic CEO in August, hasn't revealed a long-term strategy, said Phil Nalbone, an analyst at RBC Capital Markets in San Francisco. The company has said it will cut 1,100 jobs worldwide, 3 percent of its workforce, in the 2009 fiscal year.

Bold?

Medtronic shares will ``drift'' until the company's June 2 meeting with analysts in New York, Nalbone said.

``Mr. Hawkins said early on that the board had authorized him to be bold, and that was a tantalizing comment at the time,'' Nalbone said. ``We've heard or seen nothing since then as to what that means.''

The Feb. 1 U.S. approval of the Endeavor stent gives Medtronic a head start against other new-generation stents from Abbott Laboratories and Boston Scientific Corp. The companies will compete for the biggest share of the global stent market, which some analysts said could reach $5 billion.

Endeavor and the other new stents are coated with drugs to reduce the growth of artery-blocking tissue. Endeavor should add at least $645 million in annual sales for Medtronic by 2009, said Chris Cooley, an analyst at FTN Midwest Securities in Cleveland. That would more than double Medtronic's fiscal 2007 stent sales.

Compared with defibrillators, stents are ``not as big an earnings contributor,'' Cooley said. ``At best case, it's another 1 percent incremental growth. But from a psychological standpoint, it's just diversification. It's showing some growth.''

To contact the reporter on this story: Alex Nussbaum in New York anussbaum1@bloomberg.net.

Last Updated: May 20, 2008 16:16 EDT