Seeking Alpha: Coloplast Is A Rare Story On Multiple Levels

You don't see many large-cap med-tech stocks trade for more than seven times sales, but then you don't see many companies in that space logging high-single digit sales growth and excellent margins/returns on capital with a significant opportunity to grow sales and profits even further. That's the basic story on Coloplast (OTCPK:CLPBY) - a Danish med-tech company that has built an excellent business by focusing on some decidedly un-sexy areas of healthcare like ostomy and incontinence - and it creates a challenge for investors. While investors can do well in supposedly "boring" med-tech stories like Becton Dickinson (NYSE:BDX) and Bard (NYSE:BCR), it's tough to ignore an eye-watering multiple even when the growth is strong.

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Coloplast Is A Rare Story On Multiple Levels

Seeking Alpha: AngioDynamics Still Looking For Inflection

What AngioDynamics (NASDAQ:ANGO) does is not easy. This small med-tech company competes with huge players like Bard (NYSE:BCR) and Covidien (NYSE:COV) (as well as Teleflex (NYSE:TFX)) in markets that are not growing all that fast and where a large sales/marketing effort and the ability to bundle can make a significant difference in closing sales. AngioDynamics hasn't always helped their own cause either, with issues in manufacturing, quality control (including a recent FDA Warning Letter), and financial reporting.

The company is making progress, though, and seems to be nearing a point where margins and profits could grow disproportionately to incremental revenue growth. The company has also managed to add several products to its portfolio that offer real benefits to health care professionals (and savings to the facilities) and their patients. I'm not so crazy about the valuation here, but if management could push revenue growth above 5% the shares could still do rather well.

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AngioDynamics Still Looking For Inflection

The Motley Fool: A Smart Move for Endo International?

It's hard to find fault with Endo International PLC (NASDAQ: ENDP  ) . Management has done a great job of unwinding the mistakes of past management and has pursued an aggressive growth-by-M&A strategy that has the company well-positioned for the future and domiciled in low-tax Ireland. Over the past two months management has given investors another two examples of its ability to generate value – settling a large part of its vaginal mesh litigation and announcing another accretive M&A transaction.

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A Smart Move for Endo International?

The Motley Fool: Johnson & Johnson's Earnings Report Impresses

If you're going to have a "messy" quarter, you probably couldn't do it much better than Johnson & Johnson (NYSE: JNJ  ) did in the first quarter. Devices and Consumer continue to log disappointing results, but the higher-margin Pharma business is more than making up the difference. Priced for total annual returns in the mid-to-high single digits, Johnson & Johnson isn't the cheapest health care play these days, but it remains a good all-weather pick with one of the best-growing large drug franchises. 

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Johnson & Johnson's Earnings Report Impresses

Seeking Alpha: AngioDynamics Delivering The Growth, Margins Next?

When it comes to publicly-traded companies, growth fixes a lot of issues and AngioDynamics's (ANGO) return to revenue growth has seen the stock outperform nicely over the past year. There are certainly considerable challenges left for AngioDynamics management, including taking share from Bard (BCR) and Teleflex (TFX) in vascular access and maximizing the value of newer offerings like BioFlo and AngioVac. Efforts to restructure the business and generate better margins are likewise a big part of the bull thesis.

These shares are still in that grey area of "strong hold" for me. The shares don't appear all that cheap by discounted cash flow, even giving management the benefit of the doubt on margins, but the EV/revenue multiple is quite low and this is often the number that institutional investors follow. So long as the company can post better growth numbers and keep the margin improvement story alive, I would think retesting the high teens is a credible expectation.

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AngioDynamics Delivering The Growth, Margins Next?

Seeking Alpha: For Teleflex, Small Things Add Up

If companies like Intuitive Surgical and Heartware live on the "gee whiz" end of the med-tech spectrum, Teleflex (TFX) is on the other end. That is not to say that there isn't meaningful R&D and engineering going into the company's products, but categories like central venous catheters, PICCs, Foley catheters, and endotracheal tubes just don't tend to get growth-oriented med-tech investors all that excited.

Even so, Teleflex has a lot going for it. The company has been a very willing acquirer and increased investments in R&D should lead the way to more innovative new products and market share growth. In the meantime, management is focused on operating improvements that should support double-digit earnings growth. While Teleflex does not look all that cheap on a discounted cash flow basis, the company's above-average growth prospects could maintain healthy valuation multiples.

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For Teleflex, Small Things Add Up

Seeking Alpha: The Story Is Working For AngioDynamics

Investors who had been waiting patiently for AngioDynamics (ANGO) to get sentiment turned around should be happy with the better-than-50% return over the past year. The company still has work to do in taking share back from large rivals like Bard (BCR), but I think the company is on the right track. It also doesn't hurt that the company is getting more serious about restructuring operations with an eye towards better margins.

Valuation is a trickier question. On a cash flow basis, it's hard to get there even if you assume Bard or Covidien-like (COV) free cash flow margins. The good news is that med-tech stocks are seldom ever limited by DCF-based valuations and if you assign what would otherwise be a low med-tech multiple of 2x next year's sales, the stock would still be less than 10% undervalued.

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The Story Is Working For AngioDynamics

The Motley Fool: Johnson & Johnson Continues To Play To Its Strengths

I continue to be impressed with the strength Johnson & Johnson has been showing of late. The only fly in the ointment is that it's not a particularly well-balanced strength, as the company's drug business is really driving the improvements. As ointment-flies go, though, that's really not so bad and the company continues to see respectable performance in key categories like cardiology, orthopedics, and surgery. Johnson & Johnson isn't particularly undervalued today, but investors should nevertheless be able to expect high single-digit to low double-digit returns from this point, which is pretty compelling for investors looking for a quality long-term holding.

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http://www.fool.com/investing/general/2013/10/15/johnson-johnson-continues-to-play-to-its-strengths.aspx

Seeking Alpha: Home Is Where The Bard Is

Patient, if not long-suffering, shareholders in Rochester Medical (ROCM) finally got their vindication on Wednesday, as Bard (BCR) stepped up with an all-cash offer for this largely home-care focused urology devices company. Although this deal is not going to radically change the growth outlook for Bard, it is a logical buy-vs-build move that should add long-term value and give the company entry into a market that should be poised for growth in the coming years.

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Home Is Where The Bard Is

Seeking Alpha: Utah Medical Has Appealing Quality, But Needs Growth

I love sifting through micro-caps in the hunt for under-followed companies that have a lot to offer to patient investors. Unfortunately, I think I'm late to the party with Utah Medical (UTMD) as although this company is not followed by the sell-side, the shares are up more than 50% over the past year and nearly 100% over the past two years.

Utah Medical has a long history of excellent margins and free cash flow generation (better, even, that established giants like Bard (BCR) and Medtronic (MDT)), but not a lot in the way of revenue growth. While an acquisition a little while ago gave the company a great growth product, it looks like management needs to consider going back to the M&A well to take this business to another level.

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Utah Medical Has Appealing Quality, But Needs Growth

Seeking Alpha: Endo Health Has A Lot Of Work To Do

How do you ruin a specialty pharmaceutical business? Take a ridiculously lucrative stream of free cash flow generated by a strong pain franchise and reinvest it badly-reasoned acquisitions in the device space. To be fair, though, "ruin" in the case of Endo Health Solutions (ENDP) still means a stock that has climbed almost 150% over the past ten years and left both the S&P 500 and drug companies like Teva (TEVA) and Mylan (MYL) in the dust.

The relevant question now is where Endo Health goes from here. The company's one-time fortress of pain medications is now due to erode away in the face of generic competition, while the company's device business has not only failed to generate good cash flows but has actually created potentially large product liability claims. New management has already laid out bold cost-cutting moves and explicitly intends to close multiple M&A transactions. At this point, then, this stock is basically a referendum on management - if you believe they can acquire a better future for Endo, you probably like the stock. If you believe Endo won't be able to acquire enough growth, it probably looks like a hold at best.

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Endo Health Has A Lot Of Work To Do

Seeking Alpha: Spectranetics Has Multiple Attractive Opportunities, But Will They Execute?

I've had a love/hate relationship with Spectranetics (SPNC) for more than 15 years now. I've always loved the potential of the company's laser ablation products in markets like pacemaker/ICD lead removal and peripheral atherectomy, but I've hated the company's pattern of inconsistent execution and the inability to ever "get over the hump" and establish a true growth trajectory.

I expressed similar reservations about a year and half ago, and it turns out that my timing was precisely wrong, as the shares (along with the med-tech sector) began an impressive run that has seen better than 130% appreciation and several positive sell-side initiations. Curiously, my financial model has proven to be accurate in terms of revenue evolution and my estimates for margins and cash flow have proven too bullish. What has changed is investor sentiment and optimism around the company's ability to penetrate the lead removal and atherectomy markets.

Spectranetics is now valued as a med-tech growth stock, and if management can continue to deliver double-digit revenue growth it is not unreasonable to think that the shares will reach the low-to-mid $20s over the next 6 to 9 months (approximately a 20% return). Unfortunately, that potential is tempered by the realities of a challenging market and improving alternatives.

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Spectranetics Has Multiple Attractive Opportunities, But Will They Execute?

Seeking Alpha: AngioDynamics Stronger Than It Looks, But Not So Cheap

When AngioDynamics (ANGO) reported last night, it brought a challenging fiscal year to close for this small med-tech company. A combination of weak job growth, higher co-pays/deductibles and uncertainties ahead of the full implementation of the Affordable Care Act have impacted procedure counts, while the company tried to digest a sizable acquisition and restructure its sales approach. All told, the company's performance has looked pretty soft, with rivals likely gaining share in many markets.

Going over the numbers and listening to management's call, though, suggests that the business may have already started to turn the corner. This is still a "show me" story in that regard, and management needs to show that it can regain momentum in the face of larger rivals like Covidien (COV), Edwards (EW) and Bard (BCR). Investors have already started coming back around to this story, as the shares are up almost 30% from their late April lows, and I'm not sure the company can grow fast enough to make today's price a bargain.

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AngioDynamics Stronger Than It Looks, But Not So Cheap

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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http://www.massdevice.com/blogs/massdevice/can-cr-bard-use-windfall-reignite-growth

MassDevice: Edwards Lifesciences Comes Back Down To Earth ... Hard

Although I had been writing for some time that I thought Edwards Lifesciences (NYSE: EW) was significantly overvalued by the market, I don't take any particular pleasure in seeing the stock down almost one-quarter over the past year and year-to-date in 2013. Even so, it's a valuable reminder as to the risks of getting a little too bullish about first movers in fast-growing markets and the danger of the idea that “valuation doesn't matter”.

While the valuation has indeed come down significantly for Edwards, so too have the growth expectations. I do believe the market for transcatheter heart valves will exceed $4 billion in 2020 and that Edwards will remain the market leader. With free cash flow likely to grow at a low-teens rate and the stock slightly below fair value, these shares look interesting for more risk-tolerant investors.

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http://www.massdevice.com/blogs/massdevice/edwards-lifesciences-comes-back-down-earth-hard

Investopedia: It Gets A Little Harder From Here For Covidien

Covidien (NYSE:COV) has been one of the strongest large-cap med-tech stories over the past year or so. At a time when companies like Johnson & Johnson (NYSE:JNJ), Stryker (NYSE:SYK), Medtronic (NYSE:MDT), and Bard (NYSE:BCR) have been struggling to report much of any organic growth, Covidien has been solidly in the mid-single digits as the company reaps the benefit of past investments in R&D and product development.

Nothing lasts forever, though, and it looks like Covidien is lapping some challenging comparables. What's more, the overall healthcare market remains pretty sluggish and many of Covidien's rivals have stepped up their game with new product introductions. The spin-off of Mallinckrodt could unlock some value, but it looks like the market is pretty well up to speed with Covidien's value.

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Seeking Alpha: Endologix Shows How Growth-Hungry Med-Tech Investors Are

Since it seems to be accepted practice now to accuse anyone who doesn't think your stock is a screaming buy today with being "secretly short", let me be very clear from the get-go - I like Endologix (ELGX) quite a lot as a company, I think the company's technology is innovative, and I see the company as both a share-gainer in endovascular AAA treatment and one of the best growth stories today in med-tech. All of that said, I don't see it as a bargain unless/until a larger med-tech company decides that it must have it as its own.

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Endologix Shows How Growth-Hungry Med-Tech Investors Are

Seeking Alpha: Covidien Delivers Yet Again, But Valuation Is Plenty Fair

There's no reason that Covidien (COV) "shouldn't" be one of the top-performers in large med-tech, nor enjoy some of the best multiples. If there's a more consistent performer (to the good side), I can't immediately think of it, and management has built this company to deliver strong performance on a lasting basis. Not buying these shares a year or two ago goes down as a sizable regret in my personal investing history, but I would caution investors to resist the temptation to chase this name.

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Covidien Delivers Yet Again, But Valuation Is Plenty Fair

Seeking Alpha: Johnson & Johnson Looks To Get Ahead With Blocking And Tackling

With the Synthes acquisition done and Zytiga on the market, I don't think Johnson & Johnson (JNJ) investors should expect too much additional flash in 2013. That may not be such a bad thing, though, as this is a pretty good company that would benefit from some serious "back to basics" operational improvements. J&J is also looking like a like relative bargain, with good growth in pharmaceuticals and opportunity for improved results in the device business.

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Johnson & Johnson Looks To Get Ahead With Blocking And Tackling

Seeking Alpha: Cardiovascular Systems Could Have A Much Higher Value To A Strategic Buyer

For years, peripheral vascular intervention has attracted companies and analysts like JuneBugs to Bug Zappers, and with similar end results in many cases. While the promise of effectively treating narrowed or blocked arteries in the leg is indeed a potentially multibillion dollar promise, experienced investors have learned just how hard it is to translate that promise into real income and cash flow.

Cardiovascular Systems (CSII) has gone on this familiar ride. While the company seems to have developed a legitimately better mousetrap, one for which there is strong supporting clinical data, the company has struggled to drive consistent utilization growth and profit leverage. Although I'm somewhat skeptical of the company's ability to generate value for investors on stand-alone basis, the value of this company to a strategic buyer could be impressive.

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Cardiovascular Systems Could Have A Much Higher Value To A Strategic Buyer