Medtronic (MDT) is up about 2.5% this afternoon after Citi analyst Matthew Dodds chose the company as his top pick among medical device and technology companies for 2012. While the company’s ICD and spinal hardware segments have weighed on its results for the past few quarters, those businesses should see a resurgence in 2012, Dodds argues. And new gadgets, including pacemakers, should help the company achieve strong organic growth.
“Outside of a few short-lived runs, Medtronic has…underperformed its peer group markedly over the past 8 years (-23% vs. +19% for our CMTI index). This was also the case through the first 3 quarters of 2011 but in 4Q, Medtronic has broken away from the pack, posting a 13% gain vs. a flat performance for the CMTI, a 6% decline for St. Jude Medical (STJ), and a 13% decline for Boston Scientific (BSX). We expect this momentum to continue and we are going with Medtronic as our top pick for 2012.”
Dodds raised his price target to $44 from $40.
“While we are not changing our forecasts, our sense is that Medtronic remains in good position to at least meet if not exceed Street views while many of its peers are apt to have a tougher time even with more aggressive leverage plans from share repurchase.”
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