International health care product major, Covidien plc. (COV) recently revealed the commercialization of its OneShot Renal Denervation System. This offering is used to treat hypertension. OneShot received CE Mark approval in early 2012. It will be launched in EMEA and Latin America in the next few months.
Hypertension afflicts about a billion people globally. It is a chronic state that places victims at greater risk of heart disease, kidney problems and stroke. 10% to 15% of hypertension patients do not respond to standard therapy. Such patients are expected to benefit from OneShot, which is an offering with less procedure time than other options.
Covidien is a leading global health care product manufacturing company that develops and markets medical solutions for better patient outcomes. It has a history of developing and manufacturing high-quality products in a cost-effective manner. Covidien continues to expand both organically as well as inorganically, despite a challenging Med-tech environment.
We see opportunities for multiple expansion, based on the strength and diversity of the company's business and its ability to grow on the back of strategic investments and portfolio reshaping initiatives toward high-growth/high-margin businesses. Additionally, the exit of a competitor has created opportunities for the company to gain market share in the U.S.
Further, Covidien remains committed to delivering incremental returns to its investors. The company raised its commitment to return more than 50% of its free cash flow to shareholders via dividends and share repurchases.
Covidien embarked on an acquisition spree to scoop up several new companies for the diversification and development of new products/technologies. Although we believe that the company’s acquisitions will pay off in the long term, we remain cautious about the near-term dilution associated with the company’s acquisitions.
Earlier, in October 2012, Covidien’s Pharmaceuticals business, Mallinckrodt, acquired CNS Therapeutics Inc., a St. Paul Minnesota-based specialty pharmaceutical company, for roughly $100 million. Covidien plans to spin-off its Pharmaceutical business by mid-2013 to focus on its high-margin surgical products portfolio.
Covidien currently carries a Zacks Rank #3 (Hold). Haemonetics Corporation (HAE), NuVasive, Inc. (NUVA) and Unilife Corporation (UNIS) are some related Zacks Rank #1 (Strong Buy) stocks which are expected to do well.
COVIDIEN PLC (COV): Free Stock Analysis Report
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