MDT

MAKO Receives a Tremendous Offer from Stryker; Is Intuitive Surgical Next?

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The M&A flurry continued Wednesday morning as medical devices giant Stryker (click ticker for report: ) announced it would acquire MAKO Surgical (MAKO) for $30 per share, or roughly $1.65 billion. The deal represents an 83% premium to MAKO’s Tuesday closing price, but the value remains below MAKO’s peak in late 2011 and early 2012. MAKO remains unprofitable, though the firm has experienced solid revenue expansion during the past few years, going from $34 million in revenue during 2009 to $103 million during 2012. The firm isn’t expected to earn a profit in 2013, though revenue is estimated to jump 23% from the year-ago period. Given existing conditions, MAKO might not turn a profit until at least 2015, in our … Read more

Dividend Growth Gem Medtronic Is a Cash Cow

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Dividend Growth Newsletter holding Medtronic (click ticker for report: ) reported wonderful fourth quarter results. Revenue grew 4% on a reported basis (5% ex-currency) to $4.5 billion, easily exceeding consensus estimates. Earnings per share, excluding the impact of restructuring, were 11% higher than a year ago at $1.10 per share, largely exceeding consensus expectations. Free cash flow for the full-year was terrific, registering $4.4 billion. Spinal therapies have been a source of weakness in prior quarters, but revenue came in flat for the quarter, helping the firm’s regenerative therapies group increase sales 4% year-over-year for the quarter to $2.1 billion. Though the sales decline in spinal therapies moderated, the company posted 11% growth in its surgical technologies business, which continues … Read more

Dividend Growth Portfolio Holding Medtronic Posts Solid Third Quarter

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Dividend Growth Newsletter holding Medtronic (click ticker for report: ) announced solid third quarter results Tuesday morning. Revenue grew 3% (4% excluding currency) year-over-year to $4 billion, roughly in line with consensus estimates. Earnings exceeded consensus expectations by a few cents, growing 11% year-over-year to $0.93 per share on an adjusted basis. International revenue growth outpaced that of the US, growing 5% (7% excluding currency) to $1.9 billion, driven by 20% growth in emerging markets (which now accounts for 12% of revenue). We’re huge fans of this long-term trend, and we believe that growing wealth in emerging markets will provide a powerful tailwind to the core business for years to come. US revenue was roughly flat, but we (once again) … Read more

Johnson & Johnson’s Long-term Tailwinds Are Intact

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Diversified medical and consumer products firm Johnson & Johnson (click ticker for report: ) reported solid fourth-quarter results Tuesday morning. Sales jumped 8% year-over-year to $17.6 billion, roughly in-line with consensus expectations. Earnings were slightly better than anticipated, growing 5.3% year-over-year to $1.19 per share—after adjusting for several special items. Johnson & Johnson’s international expansion outpaced its domestic growth, with international sales jumping 8.9% on a reported basis (11.2% excluding currency) while its domestic business grew 6.8%. The acquisition of Synthes was the big needle-mover in the period, as it was responsible for 5.6 percentage points of the total sales increase. For the year, the growth rate of the firm’s Medical Devices and Diagnostics’ segment exceeded that of other segments, though pharmaceutical results … Read more

A Dual Focus on Valuation and Yield Is the Best Way to Combat Changes in Future Dividend Tax Rates

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With a potential hike in the dividend tax rate just around the corner, there is no more important time than now for income investors to evaluate their existing portfolio holdings to determine whether they are well-positioned for a higher-tax environment. Assuming there are no changes to the current trajectory, the top dividend tax rate is expected to rise to 39.6% next year (up from 15% currently), and the highest-income earners will see a Medicare surtax on top of that. Evaluate All Aspects of a Dividend Investment First of all, we think those investing in high-yielders (firms) at any price (HYAAP) may be most affected by this change in tax rates. These high-yielders at any price (HYAAP) tend to be favorites of those at or near retirement, particularly given the paltry payouts on fixed … Read more

There Is Milk At The Store

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This article first appeared in the September edition of the High Yield Dividend Newsletter. For more information about this publication, please see here. “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” — Winston Churchill By Brian Nelson, CFA Very few of us could have imagined that we’d witness the bull market that began on that fateful day in March 2009 that might very well mark a generational low. In 2009, major investment banks around the globe were struggling to survive, and the fallout in the mortgage markets left the banks holding paper that nobody wanted to own, let alone buy. The global financial system … Read more