Piper Jaffray Maintains a 'Neutral' on Mindray Medical (MR); Raises Prices Target & 2009 Estimates

June 29, 2009 8:27 AM EDT

Piper Jaffray & Co. maintains a 'Neutral' rating on Mindray Medical (NYSE: MR), raises prices target from $20 to $31.

Piper analyst says, "We met with three Chinese local medical equipment manufacturers and a MNC last week. Anecdotes pointed to an exceptional strong Jan-April in terms of government tender activities. More importantly, we believe MR's win rate for tenders was significantly improved so far this year vs. 2H08. Based on a typical 2-month delivery schedule for government tenders, we believe Jan-April tender activities will likely deliver a strong 2Q (Mar-Jun delivery) and potentially help out 3Q to some extent. Although we also learned that the strength in government tender tapered down in May and June, our industry contacts are expecting the activities to pick up in the August/September timeframe, just in time for 4Q. Our concern on lack of growth in non-tender revenues in the past four quarters remain valid, although we now expect it to be offset by strong government tender growth. As such, we are raising our 2Q China revenue from $75m to $83m and from $293m (25% Y/Y) to $305m (30% Y/Y) for the full year."

"In consideration of lower margins associated with government tender orders, we are adjusting our gross margin downwards by 0.6% for the year. Our 2009 non-GAAP EPS is increased by $0.01 to $1.27, a 9% Y/Y growth vs. 10% company guidance. We believe a slight miss in 2009 could be forgiven as investors are looking forward into 2010 and beyond. Our 2010 EPS ests. remain unchanged."

To see more analyst ratings on MR Click Here.

Mindray Medical International Limited (Mindray) is a developer, manufacturer and marketer of medical devices.

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