International health care products major,
) announced a share repurchase program of $3 billion to leverage
investor confidence. The company already has about 425 million
shares available for repurchase under its $2 billion share
repurchase program announced in 2011.
In 2012, Covidien returned more than $1.75 billion to its
shareholders via share buybacks and dividends. This represented
almost 100% of its free cash flow, which is well above the
company's target of returning at least 50% of its free cash flow
to investors. In the first quarter of fiscal 2013, the company
had repurchased roughly 4.4 million ordinary shares.
The share repurchase program reflects Covidien's commitment to
deliver incremental returns to investors leveraging a solid free
cash flow and strong earnings. Covidien has a strong liquidity
position to support the plan. The company ended the first quarter
of fiscal 2013 with cash and cash equivalents of $1,399 million.
It also generated $120 million in cash from operations in the
Covidien also declared its regular quarterly cash dividend of 26
cents per share, payable on May 3, 2013, to shareholders of
record as on Apr 4, 2013. Earlier in Sep 2012, the company had
raised its quarterly dividend by 16% to 26 cents from 22.5 cents.
), a Minnesota-based distributor of dental, veterinarian and
rehabilitation medical supplies, also announced a share
repurchase program as well as a dividend hike in an effort to
leverage investor return.
Covidien is well positioned to achieve its long-term revenues and
earnings growth targets based on its attractive fundamentals,
strategic R&D investment, new product cycle and expansion
into emerging markets. It currently carries a Zacks Rank #2
However, Covidien faces stiff competition and remains exposed to
pricing and utilization headwinds, along with acquisition risks.
We also remain concerned about the tepid U.S. health services
industry and the soft European economy. In addition, foreign
exchange translation is expected to dampen growth.
Other companies like
), carrying a Zacks Rank #2 (Buy), are expected to do well in the
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