A look beyond
Covidien plc (NYSE:COV)
is facing some challenging times since it reported sluggish results for the second quarter. The revenues were slightly up in comparison to last year, but profits were considerably down, due to lower margins and the adjustment of restructuring costs.
Mallinckrodt, the company’s pharmaceutical business, is being spun-off to unlock value, but it seems that the market has already valued it in the current share price. The company’s momentum is slowing, and to build it up it needs to focus on emerging markets. Currently I believe that its better to wait and watch when it comes to Covidien plc (NYSE:COV), as its losing its market share and the stock looks perfectly valued to surge further up.
The healthcare sector does not offer the promise of great share price hikes in a short span of time, but it does somewhat assure stability. More than half of Becton, Dickinson and Co. (NYSE:BDX)’s revenue comes from outside the U.S., which diversifies its operations and risks. Currently, only a quarter of the company’s operations are in the emerging markets, and these markets offer the potential for more than double-digit growth.
At a P/E ratio of 17.2 the company is fairly priced, and the company’s share repurchase program and stable dividends should attract income investors.
The article Does the Healthcare Industry mean Stability? originally appeared on Fool.com is written by tarun bachhawat.
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