Covidien Reports Strong Quarter, PT Raised To $56

Piper Jaffray has published a research report on Covidien, Ltd. COV after the company reported a strong, in-line quarter with revenues coming in with what analysts expected. In the report, Piper Jaffray writes "Revenues were in line with what we expected at $2.77B (up 5%); medical devices division was up 11%. Continued improvements in both GM (up 240bp) and tax rate (down 110bp) drove EPS of $0.95 (adjusted) vs consensus of $0.81. COV management indicated comfort with the higher end of its recent guidance for 2011, adding that "double digit" earnings growth for FY11 (Sept) was do-able. Upside seems more likely as Fx headwinds have abated and the tax rate outlook has improved." Piper Jaffray maintains its Overweight rating and has raised the price target from $53 to $56. Covidien Ltd. closed yesterday at $49.15.