Jefferies Has Buy On Covidien (COV)

Jefferies & Co. has a Buy rating and a $57 price target on shares of Covidien COV.

In a note to investors, Jefferies writes, "While the stock reaction was muted in yesterday's trading in the face of Japanese concerns, we believe that reduction in trial expenses coupled with faster regulatory review period could provide some accretion to the company's FY12 results. Solitaire is one of two key eV3 products competing in the $1.3B neurovascular market. We believe that COV can catch a fair share of the annual market from the onset given the largely “unmet clinical need” of ischemic stroke coupled with the company's deep sales reach. Assuming approval and commercialization, $25MM in Solitaire sales with our current operating outlook translates to ~$0.01-0.02 per share with upside to these estimates due to 80%+ GMs for the product. More importantly, in our view, Solitaire's overwhelming benefit decision is yet another indication that the eV3 investment is yielding early ROIC gains above expectations."

Shares of COV lost 73 cents yesterday to close at $52.00, a loss of 1.4%.