Barclays Maintains an 'Equalweight' on Medtronic (MDT); Divests Physio-Control
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Price: $90.65 -0.64%
Rating Summary:
25 Buy, 18 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 11 | New: 36
Rating Summary:
25 Buy, 18 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 11 | New: 36
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Barclays maintains an 'Equalweight' on Medtronic, Inc. (NYSE: MDT) price target of $38.00.
Barclays analyst says, "MDT and private equity firm Bain Capital announced a definitive agreement where affiliates of Bain will acquire MDT's Physio-Control business (~3% of MDT revenue) for ~$487 million (~1.1x LTM revenue). The transaction does not come as a surprise given that MDT first disclosed its intention to divest the business in 2006, and has reiterated this plan several times, most recently on its F1Q12 call. MDT expects the transaction to close in C1Q12 and will use a portion of the proceeds to offset any potential dilutive impact from the transaction to FY12 EPS. We estimate that Physio would have added $0.04-$0.06 to FY12 (1-2% of earnings) and that MDT will need to buy back ~10-20 million shares to offset the dilution (at a cost of ~$340-$680 million using the closing price on 11/16/2011)."
"We view today's news as neutral to MDT shares, given 1) the small size of the business relative to MDT; 2) expectations that MDT would divest the business; 3) the transaction is EPS neutral; and 4) it is margin accretive."
For an analyst ratings summary and ratings history on Medtronic, Inc. click here. For more ratings news on Medtronic, Inc. click here.
Shares of Medtronic, Inc. closed at $33.86 yesterday.
Barclays analyst says, "MDT and private equity firm Bain Capital announced a definitive agreement where affiliates of Bain will acquire MDT's Physio-Control business (~3% of MDT revenue) for ~$487 million (~1.1x LTM revenue). The transaction does not come as a surprise given that MDT first disclosed its intention to divest the business in 2006, and has reiterated this plan several times, most recently on its F1Q12 call. MDT expects the transaction to close in C1Q12 and will use a portion of the proceeds to offset any potential dilutive impact from the transaction to FY12 EPS. We estimate that Physio would have added $0.04-$0.06 to FY12 (1-2% of earnings) and that MDT will need to buy back ~10-20 million shares to offset the dilution (at a cost of ~$340-$680 million using the closing price on 11/16/2011)."
"We view today's news as neutral to MDT shares, given 1) the small size of the business relative to MDT; 2) expectations that MDT would divest the business; 3) the transaction is EPS neutral; and 4) it is margin accretive."
For an analyst ratings summary and ratings history on Medtronic, Inc. click here. For more ratings news on Medtronic, Inc. click here.
Shares of Medtronic, Inc. closed at $33.86 yesterday.
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