Medtronic Goes for Shock Value
With any number of reports saying Americans are getting fatter, medical device company Medtronic (MDT) may be positioned to see the bigness trend expand its own results.
Earlier this summer, the Minneapolis-based company agreed to acquire Transneuronix, a privately held medical device company and maker of the Transcend, a pacemakerlike device that is in U.S. trials to treat morbid obesity.
When the Transcend becomes a significant item on Medtronic's revenue statement, "assuming pacemaker-type pricing, the total market opportunity could easily be greater than $500 million," Glenn Reicin of Morgan Stanley wrote in a research report earlier this summer.
Jason Wittes of Leerink Swann, a biotech equity research firm, points out that the company hasn't released a selling price for the device, but he expects the Transcend to be priced at $10,000. And "for Medtronic, anything above a $500 million market opportunity would start to affect them," he says.However, Medtronic might not reap the benefits of the deal for a year or more, according to Glenn Novarro of Banc of America Securities. He doesn't see the deal materially affecting revenue and earnings until after 2006. At $52, Medtronic is a buy according to Novarro, and he has a 12-month price target of $63. Shares are now up to about $56. Banc of America Securities does and seeks to do business with companies it covers.
Measuring ProspectsAccording to the Department of Health and Human Services, surgical treatment is more effective than nonsurgical approaches for weight loss in morbidly obese patients or those who have a body mass index of 40 or greater. After trying diets, exercise and behavior modification to fight serious weight problems, some people are trying surgery. In the past year, the obesity rate among American adults rose to 24.5% from 23.7%, according to estimates from the Washington-based nonprofit Trust for America's Health, which ranked U.S. states by girth; the survey declared Mississippi the fattest state.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV