On April 1, we have updated our research report on
). We are impressed with the company's recent fiscal 2014 first
quarter results but remains concerned about stiff competition and
pricing and utilization headwinds in certain end markets.
BARD C R INC (BCR): Free Stock Analysis
BECTON DICKINSO (BDX): Free Stock Analysis
COVIDIEN PLC (COV): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
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Covidien posted a 3.1% rise in first-quarter fiscal 2014 adjusted
earnings per share to $1.00, which beat the Zacks Consensus
Estimate by 6 cents. Despite facing headwinds from foreign
exchange movements, the medical device excise tax and incremental
investments in emerging markets, the company managed to deliver a
positive earnings surprise in the quarter.
Revenues in the quarter grew 2.8% (up 5% in constant currency) to
$2,639 million, exceeding the Zacks Consensus Estimate by 1.4%.
On a geographic basis, revenues in the U.S. market increased 3.0%
to $1,307 million. On the other hand, international revenues
increased 2.6% to $1,332 million, driven by growth of 11.5% in
Covidien reiterated its outlook for fiscal 2014. Covidien expects
revenues to grow 2-5% year over year at constant exchange rate
for fiscal 2014. Further, the company aims to achieve a dividend
payout ratio in excess of 35% over time and is targeting to
attain a ratio of at least 30% within the next 12 months.
Covidien is expanding its footprint in the emerging markets,
notably in Eastern Europe, Middle East and Africa, Asia and Latin
America, and boosting market share in core segments through
investments in sales and marketing infrastructure.
Covidien's core Medical Device business overlaps with the
business of its competitors like
Johnson & Johnson
Becton, Dickinson and Company
CR Bard Inc.
). Therefore, market share gains by these competitors remain an
Currently, Covidien retains a Zacks Rank #3 (Hold).