CHICAGO, Sept. 8, 2011 /PRNewswire/ -- Today, Zacks Equity
Research discusses the Medical Devices, including Medtronic
Inc. (NYSE: MDT), Boston Scientific Corporation (NYSE:
BSX), St. Jude Medical (NYSE: STJ), Edwards
Lifesciences (NYSE: EW) and ZOLL Medical (Nasdaq:
ZOLL).
(Logo:
http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
A synopsis of today's Industry Outlook is presented below. The
full article can be read at
http://www.zacks.com/stock/news/60372/Medical+Devices+Stock+Outlook+-+Sept.+2011
In our universe, we see growth potential in companies dealing
with cardiovascular devices, neuro and radiation oncology products.
Names include Medtronic Inc. (NYSE: MDT), Boston
Scientific Corporation (NYSE: BSX), St. Jude Medical
(NYSE: STJ), Edwards Lifesciences (NYSE: EW) and ZOLL
Medical (Nasdaq: ZOLL).
The above-listed companies produce life-sustaining products and
are less affected by economic turbulence. Some of these companies
have been successful in weathering the storm (pricing, currency and
volume headwinds) in the cardiovascular space.
Also, the radiation oncology market is benefiting from improving
trends and technology advancements, providing a compelling growth
opportunity. These companies are all leading players in their
respective fields and are potential winners in the long run.
MedTech Giants: A Few Hiccups but Long-Term Winners
With a spate of new products, the Big Three players (Medtronic,
Boston Scientific and St. Jude) in the $6.5
billion implantable cardioverter defibrillator ("ICD")
market are well-positioned to gain market share, despite the
challenging business environment and several other barriers to
growth. These companies have a number of levers to pull and
represent a good bet for long-term investors.
Among the names above, Medtronic, the undisputed leader in the
MedTech space, has a diversified presence in cardiovascular, neuro,
spinal, diabetes and ENT and boasts an attractive pipeline.
Although the company witnessed weakness in its ICD business in the
most recent quarter, new products should gradually contribute to
growth and help it maintain/gain ICD share.
The long-awaited issue of the FDA warning letters, relating to
Medtronic's Mounds View facility and manufacturing unit in
Puerto Rico, was finally resolved
in March 2011, paving the way for the
U.S. approval and launch of new products including the
much-anticipated Protecta ICD device.
Boston Scientific has maintained its leadership in the drug
eluting stent ("DES") market. The company saw all-round growth
during the second quarter, outstripping its own guidance, although
the CRM segment remains challenging. After several quarters, growth
in the Cardiovascular portfolio came as a pleasant surprise. Based
on a strong quarter, the company raised its guidance for 2011. We
recently upgraded the stock to Outperform.
We remain intrigued by St. Jude's ability to consistently
produce positive earnings surprises and revenue growth. The company
is poised for incremental opportunities in CRM on the back of
strong product momentum. St. Jude's Fortify and Unify devices are
already gaining notable traction.
Several new products (including the quadripolar CRT-D systems)
should boost the company's CRM share in 2011, despite the weak
market conditions. However, we do account for the fact that
approval of the highly-anticipated quadripolar CRT-D, has been
pushed back to early fourth-quarter 2011 from mid-2011.
Beyond the MedTech giants, Edwards Lifesciences represents
another value proposition. The company recorded strong revenue
growth in the second quarter, banking on robust performance of its
heart valve therapy products. Apart from heart valve therapy,
healthy growth at the critical care segment (led by Flotrac systems
and pressure monitoring products) is also encouraging.
Moreover, Edwards's robust balance sheet enables it to target
suitable acquisitions. Following the favorable recommendation of
the FDA Advisory Panel for Sapien THV (for inoperable patients),
the company is confident of receiving final approval by
October 2011. The U.S. approval of
the device should offer a major boost to the company's sales in the
long term.
Another interesting pick in our portfolio is resuscitation
devices-maker ZOLL Medical. ZOLL is a leading player in the global
market for external defibrillators, which is worth more than
$1 billion. The company's LifeVest
wearable defibrillator business continues to grow at a healthy
quarterly run rate, benefiting from increased awareness of the
product and associated sales force enhancements. Moreover, its
significant international presence should also push growth.
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