NEW YORK, April 4, 2011 /PRNewswire/ -- Covidien Plc (COV: $53) has been picked by Standard & Poor's Equity Research as its Focus Stock of the Week. COV carries S&P's highest investment recommendation of 5-STARS, or Strong Buy. Covidien is one of the largest suppliers in the world of certain medical devices, specialty pharmaceuticals and medical supplies, and is number-one or number-two in businesses representing more than 75% of its sales. The medical devices segment, the company's fastest growing segment, accounts for about two-thirds of its annual revenues.
"We believe Covidien has improved its top-line growth prospects through portfolio optimization," said Phillip Seligman, Healthcare Analyst at Standard & Poor's Equity Research. "Since its formation when Tyco International was split into three companies in July 2007, it has completed 12 acquisitions, 10 licensing agreements, and eight divestitures of underperforming businesses."
Seligman noted that while U.S. and European procedure volume growth has been tepid, Covidien's mix shift has enabled it to increasingly penetrate the hospital markets. "Other growth drivers we see include accelerated new product launches, sales force expansion, and increasing penetration of emerging markets," added Seligman. "Long term, we expect volume trends to benefit from the aging U.S. and rest-of-world populations and improving living standards in emerging markets."
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