) scaled up nearly 1.0% after U.S. Food and Drug Administration
(FDA) lowered the risk profile of PillCam endoscopic camera,
produced by the company's subsidiary Given Imaging. Given Imaging
had sent a petition for the downgrade in Nov 2012.
FDA has now classified the PillCam as a Class II device. This
lowers the reviewing criteria of the device from the premarket
approval to the 510(k) premarket notification process. Previously,
FDA has allowed Given Imaging to sell the device only as a back-up
for patients who are incapable for a complete colonoscopy through
Given Imaging's PillCam is a capsule endoscope capable of capturing
image of the digestive system when it is ingested. Per the FDA,
risks associated with the device include tissue reactions, failure
to excrete the device, equipment malfunction and abdominal pain,
nausea, vomiting and choking.
FDA stated that establishment of special controls could mitigate
the risks without the need for stricter review. These special
controls include bite, pH resistance and shelf-life testing as well
image color-performance, electromagnetic compatibility, and battery
Covidien posted a 3.2% rise in fiscal 2014-second quarter adjusted
earnings per share to 96 cents from 93 cents a year ago, beating
the Zacks Consensus Estimate by a penny. The marginal rise in
earnings was attributable to adverse impacts from foreign exchange
movements and the medical device excise tax. Net earnings, however,
fell 2.2% to $435 million from $445 million due to decrease in
weighted average shares outstanding.
Total revenues in the quarter grew 2.7% to $2,598 million, missing
the Zacks Consensus Estimate of $2,610 million. On a geographic
basis, revenues in the U.S. market increased 1.6% to $1,277
million. On the other hand, revenues from non-U.S. developed
markets rose 1.8% to $938 million and from emerging markets went up
8.8% to $383 million.
Covidien reiterated its revenues outlook for fiscal 2014.
Previously, Covidien had revealed that it expects revenues to grow
2-5% year over year at constant exchange rate (CER) for fiscal
Covidien currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the medical products industry that are also
worth considering include
Eagle Pharmaceuticals Inc.
). All of them retain a Zacks Rank #2 (Buy).
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