Zacks Industry Outlook Highlights: Medtronic, Boston Scientific, St. Jude Medical, Edwards Lifesciences and ZOLL Medical

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Nov 16, 2011, 09:30 ET

CHICAGO, Nov. 16, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Medical Technology, including Medtronic Inc. (NYSE: MDT), Boston Scientific Corporation (NYSE: BSX), St. Jude Medical (NYSE: STJ), Edwards Lifesciences (NYSE: EW) and ZOLL Medical (Nasdaq: ZOLL).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at

http://www.zacks.com/stock/news/64707/MedTech+Industry+Stock+Outlook+-+Nov.+2011

We continue to recommend companies providing life-sustaining products and procedures, given their strong recurring stream of revenues as patients are unable to forego these products. Furthermore, investors should look at companies with strong earnings quality and liquidity profiles. These companies appear attractive considering their ability to leverage strong balance sheet and cash flows in maximizing shareholder value (via dividends/share repurchases).

Large companies with a wide product portfolio/healthy pipeline and strong infrastructure are also better poised for improved returns. Moreover, companies focusing on more judicious R&D investment, expansion into new markets and cost-saving through restructuring are better placed in 2011. These companies have greater capability of withstanding the sustained macro-level issues and increasing regulatory pressure.

Pressed by a still-soft economy, top-tier devices makers are continuing their merger/acquisition binge in 2011, especially as a means to enter new markets and diversify their portfolio. Although this represents an important means for growth, we continue to advise investors to shun companies that have grown historically through extensive acquisitions only. These companies may find it difficult to fund acquisitions considering the lingering impact of the recession.

Also, they face increasing challenges in integrating acquisitions and delivering operational synergies from them, which are considered to be the prime reason for failures of mergers and acquisitions. Moreover, we still recommend investors to eschew companies making non-life-sustaining products and procedures (including elective procedures such as hip and knee replacement), as they are still engulfed by softened patient demand.

OPPORTUNITIES

In our universe, we see growth potential in companies dealing with cardiovascular devices, neuro and radiation oncology products. Names include Medtronic Inc. (NYSE: MDT), Boston Scientific Corporation (NYSE: BSX), St. Jude Medical (NYSE: STJ), Edwards Lifesciences (NYSE: EW) and ZOLL Medical (Nasdaq: ZOLL).

The above-listed companies make life-sustaining products and are less affected by the economic turbulence. These companies are all leading players in their respective fields and are potential winners in the long run. Some of these players have been successful in weathering the storm (pricing, currency and volume headwinds) in the cardiovascular space.

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