Medtronic: Sales and Share Prices Should Continue to Tick Up

Dec.10.06 | About: Medtronic plc (MDT)

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Doctoring by BlackBerry? by Bill Alpert

Highlighted companies: Medtronic Inc. (NYSE:MDT), Amgen Inc. (NASDAQ:AMGN), Genzyme Corp. (GENZ), Wyeth (WYE), DexCom Inc. (NASDAQ:DXCM)
Summary: Medtronic Inc. (MDT) shares are up 10% in the past two weeks on its latest quarterly sales figures, despite the fact that the increase was due to international sales (U.S. sales were down 4% y/y but up 12% q/q). CEO Art Collins says MDT can ramp up sales at a 15% pace for the next five years, doubling its present $11.3b revenues. The case: (1) Wireless telemetry which allows remote patient Medtronic Chart 10 12 06treatment should boost ICD (implantable cardioverter defibrillators) sales. (2) An aging population should spur sales of devices for spine, pancreas, and brain patients; MDT says biotech companies like Amgen (AMGN) and Genzyme (GENZ) are relying on Medtronic to deliver experimental drugs to targets in the heart or brain. (3) Its 57% U.S. market share is driven, according to doctors, by a strong brand loyalty. (4) Among its rivals Boston Scientific Corp. (NYSE:BSX) and St. Jude Medical Inc. (NYSE:STJ), only Medtronic has the cash-flow to develop/acquire the technology to detect heart-attacks before they happen. The company sees huge potential in implantable sensors that allow doctors to monitor patients without putting them in intensive care. Within two months Medtronic expects a FDA panel to review its application for 'Chronicle,' which wirelessly reports the blood pressure in the right ventricle of a patient's heart, giving doctors a week's warning to prevent heart failure by adjusting medication. VP Stephen Oesterle calls Chronicle, "the most important product we're going to release in the next five years," because it will pave the way for other wireless monitoring systems that reduce emergency room visits for patients with diseases like diabetes. "We're several years ahead of anyone on this stuff." Barron's: Shares could climb into the 60s as new products spur sales.
Related: Heartening Test Results May Pump ICD Makers -- Barron's, Medical Device Industry Breathes Sigh of Relief, Medtronic Raises Dividend for 28th Straight Year, Jim Cramer's Take on MDT