Covidien plc (COV), Pfizer Inc. (PFE): Buybacks Could Keep Up This Stock’s Momentum

Page 1 of 2

Dublin-based pharmaceutical and medical device company Covidien plc (NYSE:COV) recently announced that it had authorized a share buyback program that could be worth up to $2 billion. This announcement comes just a few months after the company boosted its dividend by more than 15 percent and issued several quarters of solid earnings. To make matters even more interesting, the company appears to be nearing the completion of its long-awaited spin-off of Mallinckrodt Pharmaceuticals (MKG – not yet listed).

Covidien plc (COV)

Taken together, these factors appear to make a convincing case for Covidien plc (NYSE:COV)’s short-term performance. Despite exhibiting market-beating performance thus far this year, Covidien plc (NYSE:COV) is perennially overlooked in favor of larger and more “popular” medical firms like Pfizer Inc. (NYSE:PFE) and Medtronic, Inc. (NYSE:MDT) . If the company can translate these positive signs into lasting momentum for its stock, those who take long positions in Covidien plc (NYSE:COV) at these levels could be handsomely rewarded.

About Covidien

Covidien is a diversified manufacturer and distributor of various medical devices and products that can be used in institutional and private settings. It specializes in producing devices that can be used during surgery, including surgical staplers, vessel-sealing products, and laproscopic equipment for minimally invasive procedures. Covidien plc (NYSE:COV)also makes a number of tissue repair and wound care products and devices. Separately, Covidien plc (NYSE:COV) engages in a number of pharmaceutical development operations and currently spends about 4 percent of its gross revenues on research. Its signature pharmaceutical products include various pain relief drugs and imaging agents. Covidien earned $1.9 billion on gross 2012 revenues of about $12 billion.

Competitors

It goes without saying that the pharmaceutical and medical device industries are frighteningly competitive. Covidien has several major pharmaceutical competitors, including companies like Pfizer Inc. (NYSE:PFE) and Merck (MRK). Like Covidien, Pfizer Inc. (NYSE:PFE) engages in the development of a variety of pharmaceutical products. Since it focuses specifically on drugs and drug delivery systems, Pfizer Inc. (NYSE:PFE) may be better positioned to compete in this market. However, it has been widely reported that the company faces a “patent cliff” and will need to work to replenish its development pipeline. With revenues of around $59 billion, Pfizer Inc. (NYSE:PFE) is several times larger than Covidien.

Covidien also competes with medical device manufacturers like Medtronic. Many of Medtronic’s most important devices deal with various cardiovascular issues, including arrhythmia, heart failure, fibrillation and other problems. The company also produces devices that are designed to combat kidney failure and other renal issues. Medtronic is one of the world’s largest providers of musculoskeletal therapy devices and surgical aids. With revenues of around $16.5 billion, Medtronic is roughly the same size as Covidien.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!