St. Jude Medical's stock drops after short seller Muddy Waters takes aim

Shares of St. Jude Medical Inc. slumped as much as 6% in morning trade Thursday, before paring some losses, after short-selling firm Muddy Waters Capital said it was betting against the cardiovascular medical device maker. Muddy Waters Director of Research Carson Block wrote in a research note that he believes "there is a strong possibility" that nearly half of St. Jude's revenue is about to disappear for about two years. He believes the company's pacemakers, ICDs (implantable cardioverter-defibrillatosr) and CRTs (cardiac resynchronization therapy devices) could, and should, be recalled and remediated, amid concerns over the ease in which cyber attacks could cause malfunctions. The devices represent about 46% of 2015 revenue. "Based on conversations with industry experts, we estimate remediation would take at least two years," Block wrote. "Even lacking a recall, the product safety issues we present in this report offer unnecessary health risks and should receive serious notice among hospitals, physicians and cardiac patients." Despite the selloff, the stock has still run up 28% year to date, while the S&P 500 has gained 6.6%.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.