Friday, June 14, 2013

MassDevice: Can C.R. Bard Use A Windfall To Reignite Growth?

C.R. Bard (NYSE:BCR) has a problem; specifically, a growth problem. While the company has #1 or #2 market share in markets that make up over 80% of its revenue, a hugely consumables-oriented business, and a solid legacy when it comes to margins and returns on capital, Wall Street is a “what will you do for me tomorrow?” sort of place, and Bard's poor organic growth has kept a lid on the stock when so many other med-techs have enjoyed big runs.

Perhaps that can change, though. For starters, Bard has the opportunity to leverage past R&D and M&A with new products like a drug-coated balloon and an atrial fibrillation ablation system. Bard is also looking forward to a large cash settlement from Gore, a settlement that management has already earmarked in part for further growth-oriented M&A. This gives investments an interesting dilemma with these shares – the shares are only slightly undervalued on an “as is” basis, but factoring the settlement and potential leverage from that settlement (M&A that generates even more revenue, profits, and cash flow) makes the shares quite a bit more interesting.

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