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10 Top Morningstar M&A Stock Picks for 2012


In the medical devices sector, Abiomed (ABMD - Get Report) is Morningstar's top takeover candidate because of key new products in development, which should garner the interest of larger competitors. The Danvers Ma. -based company specializes in ambulatory, catheter and biventricular devices used by cardiologists and surgeons for patients who are suffering from heart trauma.

"Abiomed could attract attention from nearly any large cardiac device firm; in fact, one of J&J's (JNJ) key managers recently expressed M&A interest in the ventricular assist device market in which Abiomed competes," writes Morningstar. In addition, according to Morningstar, the company's minimally invasive Impella devices were recently included in U.S. clinical guidelines and possess strong growth prospects that may attract M&A.

"While fairly valued as a stand-alone entity, we believe Abiomed could be worth nearly 40% more than recent chare prices as an M&A target," writes Morningstar

Morningstar gives Abiomed a three star rating and a fair value of $17 a share, a discount to its current share price of $18.71. The company is expected to lose $1 cents a share in its fourth quarter 2011 results due on Feb. 9, according to Zacks consensus estimates. Analysts give the company an estimated price target of $22.14 a share on 2012 revenue of $149 million and profit of $3.9 million, according to data compiled by Bloomberg. For more on Abiomed, see top stocks of the 10 best mutual funds.

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