Leading medical devices player,
Medtronic
(
MDT
) has decided to participate in the annual JP Morgan Healthcare
Conference on January 9, 2012. The company will be represented by
its chairman and CEO, Omar Ishrak, at the conference.
The Minneapolis based company continues to face significant
challenges as its core segments, ICDs and Spinal, accounting for
40% of the business, are on a declining trend. The situation
becomes more challenging with the current economic uncertainty and
austerity measures adopted in various countries. This is not
typical of Medtronic alone and its peers
Boston Scientific Corporation
(
BSX
) and
St Jude Medical
(
STJ
) are also facing the brunt.
Despite several challenges, the company is undertaking
initiatives to revive its top line. This includes penetration of
international markets, portfolio expansion and restructuring
initiatives, which should benefit the company over the long term.
Medtronic has witnessed greater contribution from recently launched
products along with strong growth from international markets. We
believe the company will discuss these strategies at the upcoming
conference.
Over the past few years, Medtronic has been reallocating
resources toward new therapies to drive growth. Meaningful
acquisitions made over the last few quarters include Ardian,
Invatec, Osteotech and ATS Medical. About 60% of its business is
growing at 8% (on a combined basis) fueled by new products, which
in turn triggered pricing gains and market expansion. These
businesses are already contributing to the company's growth profile
and are expected to be a larger force going forward.
Medtronic's focus on globalization is prompted by the
opportunity rife in international destinations, especially in the
emerging markets. These markets recorded 20% growth during the most
recent quarter, a trend that is expected to continue into 2012. The
quarter marked the 11
th
straight period of generating more than 20% growth in China.
Collectively, India, Brazil and China having grown nearly 20%
annually over the past four years, with health care becoming a
national priority, now represent 10% of total revenues.
The company also resorted to restructuring to align its cost
structure with the current market conditions and prepare the
groundwork for long-term growth. To achieve this objective,
Medtronic decided to scale back infrastructure in slower growing
areas with increasing investment in niches with potential such as
emerging markets and new technologies.
We are currently Neutral on Medtronic, in line with the
short-term Zacks #3 Rank (Hold).
BOSTON SCIENTIF (
BSX
): Free Stock Analysis Report
MEDTRONIC (
MDT
): Free Stock Analysis Report
ST JUDE MEDICAL (
STJ
): Free Stock Analysis Report
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