Leading healthcare products maker Covidien plc (COV) recently announced that its Board has authorized a share buyback program allowing it to repurchase up to $2 billion of its ordinary shares. The buyback will be executed from time to time, based on market conditions.
The move underscores the Ireland-based company’s commitment to deliver incremental returns to investors leveraging a solid free cash flow and strong earnings power. Covidien continues to maintain a positive earnings surprise streak having topped the Zacks Consensus Estimate in each of the last four quarters.
Covidien bought back roughly 4.9 million shares in the most recent quarter for $276 million. The company has returned more than $1 billion to its shareholders (in the form of dividend and share repurchase) over the past twelve months, representing over 50% of its free cash flows, well above its target of 25%-40%.
Covidien is a leading global healthcare products company that develops and markets medical solutions for better patient outcomes. The company’s core medical devices business faces stiff competition from Johnson & Johnson (JNJ), Becton Dickinson (BDX) and C.R. Bard (BCR).
Covidien remains committed to rolling out new products and technologies, focusing on fast-growing markets, and boosting market share in core segments through investments in sales and marketing infrastructure.
Moreover, the company is expanding its portfolio through acquisitions and strategic collaborations. Covidien also remains focused on achieving its long-term target of mid single-digit revenues and double-digit earnings growth.
The company posted solid results in third-quarter fiscal 2011 (ended June 24) with both revenues and earnings outperforming the Zacks Consensus Estimates riding on strong double-digit growth in the core Medical Devices division.
Covidien, during the third quarter call, announced a restructuring program across its three business segments, aimed at boosting its cost structure. The move is expected to cost the company roughly $275 million (pre-tax). Covidien expects annual savings of $175-$225 million from the effort.
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