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TheStreet Open House

5 Stocks That Make Prime Acquisition Targets

NEW YORK ( Stockpickr) -- It doesn't take a lot of vision to predict that the medical device industry will see a lot of acquisitions in 2012. After all, it happens every year.

The industry's biggest players, such as Medtronic (MDT), Boston Scientific (BSX) and Roche Holdings, struggle to find ways to organically boost revenue. So they do the next best thing: Buy their way into growth. These deal-makers typically seek to bring in more products for their sales forces to pitch to customers, or they look to expand their technological knowhow by incorporating other firm's products and R&D efforts into their own.

>>5 Rocket Stocks Ready to Blast Off

Case in point: Roche Holdings recent efforts to acquire Illumina (ILMN). Roche wants to quickly establish a strong presence in the field of DNA analysis, and Illumina, the industry leader, provides just such an entry into the space.

Here are five other medical device firms that could hold great appeal for the industry's larger players.


Nuvasive (NUVA) has quickly gained traction in the field of minimally invasive spinal surgery. Sales grew steadily throughout the last decade, and management poured the company's cash flow back into R&D and an expanded salesforce.

Trouble is, the shaky health care spending environment has led to temporary reimbursement challenges from insurers. As a result, Nuvasive's sales growth is slowing. 25% top-line growth is now in the teens and could hit just 10% in 2013.

Yet over the long haul, this should remain a steady grower. Nuvasive's technology yields shorter hospital stays and reduced recurrences of back pain, which saves the health care system money in the long-term.

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