The medical technology company agreed to pay over $1 billion to Edwards Lifesciences Corp. (EW) to settle patent litigation and keep its CoreValve artificial heart valve on the U.S. market, according to Reuters.
The U.S. market for the procedure is expected surpass $500 million in 2014 and double in size by 2018, according to Jefferies (JEF) analysts.
Edwards was first to market with its Sapien technology in 2011 in the U.S., while Medtronic received U.S. regulatory approval for CoreValve in January, Reuters said.
Edwards Lifesciences shares were down -1.56% to $85.13 in heavy volume trading.
TheStreet Ratings team rates MEDTRONIC INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate MEDTRONIC INC (MDT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MDT's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $1,612.00 million or 5.42% when compared to the same quarter last year. In addition, MEDTRONIC INC has also modestly surpassed the industry average cash flow growth rate of 5.14%.
- MDT's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.07 is very high and demonstrates very strong liquidity.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: MDT Ratings Report