Citi analyst: Covidien is the top stock pick for 2010

December 22, 2009 by MassDevice staff

Matthew Dodds of Citi Investment Research says Mansfield, Mass.-based medical device giant Covidien is the best stock pick of the coming year.

A spate of mid-tier acquisitions, culminating in the recent Aspect Medical Systems buyout, has Covidien (NYSE:COV) poised for big gains on Wall Street next year, according to a Citi Investment Research analyst who made the company's stock his top pick for 2010.

Analyst Matthew Dodds, who covers health care and equipment supplies for Citi, said he expects shares of Covidien stock to rise to around $56 per share, a 20 percent premium on yesterday's $47-per-share closing price.

Dodds said Covidien's recent performance was the reason for his bullish stance on the Mansfield, Mass.-based healthcare colossus, citing a series of mid-tier mergers the company completed in 2009. He named the Aspect Medical Systems buyout and last July's Power Medical acquisition as likely to bear fruit in 2010. Covidien was one of the most active acquirers in 2010, buying out at least five firms during the year as it feasted on a series of relative bargains prompted by the global recession.

Covidien also did a good job of shedding some of its under-performing business units this year. For example, last week the company announced it had shed all 37 of its U.S. radiopharmacies.

Finally, Dodds pointed out that general surgery has't suffered from the same volatility as other sectors of the industry, which made him very confident that the company's upward trend would continue well into the new year.