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Medtronic's Pipeline Flex Embolization Device Gets FDA Nod - Analyst Blog

Leading medical device player, Medtronic plc ( MDT ), has extensive plans to strengthen its newly incorporated Neurovascular portfolio within its Restorative Therapies Group (RTG). The company is banking on the impending limited U.S. launch of its Pipeline Flex embolization device (the next-generation flow diversion device), subsequent to its approval by the U.S. Food and Drug Administration ("FDA").

The Pipeline Flex embolization device is designed for minimally invasive large and giant brain aneurysm treatment. This device diverts blood flow away from an aneurysm reconstructing the diseased section of the parent vessel. According to Medtronic, the Pipeline Flex embolization device combines its braid design with a new delivery system which will offer improved accuracy and control over advanced procedures inside the brain.

Although this device is underway for a limited launch, Medtronic is positive on the prospects of this latest-generation flow diversion device. According to the company, flow diversion has been proved a groundbreaking therapy for large or giant wide-necked brain aneurysms that hold high risk of rupture and have high chances of complications with traditional treatment.

The huge and growing worldwide market of brain aneurysm treatment offers optimism. Recent data provided by the Brain Aneurysm Foundation has revealed that each year an estimated 500,000 people die globally due to ruptured brain aneurysms, with half of them below 50 years of age.

We take note that, with the completion of the company's much awaited $42.9 billion Covidien acquisition (closed in the latter half of Jan 2015), Covidien's Neurovascular business has been integrated into Medtronic's legacy RTG as an independent business unit. Currently, this business unit has two product lines viz. Access and Coils & Stents. Originally, the Pipeline Flex embolization device was a part of Covidien's legacy Neurovascular product line, and was awarded with CE Mark in Europe last year.

With the two Med-Tech giants joining forces, we expect the combined company's Neurovascular portfolio to introduce more such revolutionary therapy options in the upcoming period. We are encouraged to know that the combined entity has plans to invest $10 billion in medical technology research and development in another 10 years, and thus pose significant competitive threats to peers. The acquisition is expected to be accretive to Medtronic's cash earnings in 2016 and significantly accretive thereafter.

Zacks Rank

However, at present, we remain bearish on Medtronic which carries a Zacks Rank #5 (Strong Sell). Some of the better-ranked medical product stocks are Abaxis, Inc. ( ABAX ), ICU Medical, Inc. ( ICUI ) and Nxstage Medical, Inc. ( NXTM ). All the three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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