Join        Login             Stock Quote

Covidien (COV) Initiated as 'Buy' by Brean Capital, PT $66

 November 20, 2012 11:33 AM

(By Balachander) Covidien Plc (NYSE: COV) shares were initiated with a "buy" rating and price target of $66 by Brean Capital LLC.

The company is a premium name within medtech, consistently delivering solid mid-single digit growth (3 percent -5 percent) top-line organic growth and double-digit bottom line growth, the brokerage said.

Brean Capital said Covidien's product mix is heavily weighted toward lower ASP (under $500), but non-commoditized high efficacy to dollar products—that continue to thrive, even in a difficult hospital environment. 

In addition, the company's growth is also driven by dominant market positions, emerging market expansion and a disciplined portfolio approach with an excellent track record in buying AND selling, the brokerage said.

[Related -S&P Buys That Pass The Buffett Test]

Brean Capital estimates COV will generate over $2 billion in free cash flow in F2013 (7 percent FCF yield) and return half to shareholders.

"At the end of the 3Q (July 2013), COV plans a tax free spin of this business, which will create some dilution from an increase in infrastructure cost and a temporary unwinding of tax infrastructures, but we see increased value in separating the business," the brokerage wrote.

Brean Capital wrote that risk to its price target includes risk of a dilutive acquisition, legal and regulatory risk, and increased pricing and volume pressure. The company is only partially hedged and has an increasing international footprint, making it susceptible to FX volatility.

[Related -Dividend Roundup: INTC, HPQ, COV, MOV, WASH]

Shares of the Dublin-based company, which has been trading in the 52-week range of $41.69 to $60.81, shed 0.28 percent to trade at $56.59 on Tuesday.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article image3 Deep Value Stocks That Could Mount A Turnaround

Although the market action was a bit choppy in the first quarter of 2015, one fact is inescapable: the read on...

article imageFrenzied Speculative Activity In China's Equity Markets

It's time to take another look at the recent developments in China's equity markets as major indices hover read on...

article imageDeflation Fears Are Over-Inflated

The Bank for International Settlements released a study that is a breath of fresh air on read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.