NEW YORK (TheStreet) -- Covidien (COV) surged to a 52-week high today of $92.68 on Monday after rival medical device manufacturer Medtronic (MDT) announced it would buy the Irish company for $42.9 billion in a cash-and-stock deal.
Medtronic said it would pay $35.19 in cash plus 0.956 shares per Covidien share. This represents a 29% premium on Covidien's Friday closing price of $72.02.
The combined company would have its executive offices in Dublin but would operate in Minneapolis, where Medtronic employs more than 8,000 people.
Must Read: Medtronic to Pay $43B for Ireland's Covidien
For more detailed analysis on this story, read Andrew Bulkeley's article here.
The stock was up 19.13% to $85.80 at 12:45 p.m. More than 51.9 million shares had changed hands, which dwarfed the average volume of 1,943,330.
Separately, TheStreet Ratings team rates COVIDIEN PLC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COVIDIEN PLC (COV) 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 growth in earnings per share, increase in net income, revenue growth, notable return on equity and reasonable valuation levels. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- COVIDIEN PLC has improved earnings per share by 21.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, COVIDIEN PLC increased its bottom line by earning $3.40 versus $3.37 in the prior year. This year, the market expects an improvement in earnings ($4.00 versus $3.40).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 0.5% when compared to the same quarter one year prior, going from $439.00 million to $441.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 3.6%. Since the same quarter one year prior, revenues slightly increased by 2.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, COVIDIEN PLC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: COV Ratings Report