Covidien Ltd. (COV)

Knifecatcher1 (< 20) Submitted: 7/21/07 6:18 PM : Start Price: $43.07 COV Score: 40.85

Morningstar now has Covidien at 5-stars. They have a $58 fair value on it. Personally, I like to own some additional medical/healthcare stocks as the bull gets old, and the economic cycle shows signs of slowing growth.

I usually write my own opinions, but this one is cut & pasted from Morningstar's open board:

Profile. "Covidien, formerly the health-care unit of Tyco International, develops, manufactures, and distributes medical and imaging devices, pharmaceuticals and other health-care products to medical professionals worldwide. The company, through its predecessors, has 140 years of operating history and boasts a direct sales presence in more than 50 countries."

Tyco, the conglomerate recently split into three parts. Covidien is basically composed of the former Tyco's health-care businesses.

I believe that its separation from Tyco will eventually unlock value for owners. Alex recently wrote about Covidien: "No longer a part of a large conglomerate, Covidien now has the ability and financial resources to rectify this situation. Management's plans to substantially ramp up development spending came as no surprise to us. We believe the company's desire to accelerate growth across its business units, particularly medical devices, has potential. Covidien still controls a sizable share of the market in surgical and energy-based devices, and should benefit from growing demand for minimally invasive surgeries, a need that many of its products address. Furthermore, the firm's fine-tuned acquisition strategy, which focuses on technologies that fill the voids in its offerings, rather than expand into unrelated fields, has already resulted in a slew of promising products that complement and enhance Covidien's existing line."

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