Covidien top exec Rich Meelia detailed the near-term outlook for the company on financial cable TV channel CNBC on Nov. 17. The company recently beat earnings estimates and raised their 2010 sales and profit outlooks. Although profits in the latest quarter dipped 85%, the stock price is up 25% in 2009 and the company has made 'significant' investments in high-growth areas since the spin-off from conglomerate Tyco Industries in January, 2007.
Mr. Meelia expects several factors to contribute to Covidien's expected high growth:
- the medical devices segment, which makes up 65% of sales, is driven by surgical procedures which are expected to increase with the aging population.
- although the company acknowledges that it will be affected if President Obama's healthcare reform becomes reality, recent versions of the House bill have lowered the onerous 'device tax' by ~50%.
- the weak U.S. dollar helps Covidien's financials by increasing sales (most of its products are made in the U.S. and sold overseas). The dollar is expected to remain weak for an extended period.
('The Call', CNBC, Nov. 17, 2009)
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