Sei sulla pagina 1di 1


+44 (0)20 7232 3090 Traded on

AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange Regulated and

LSE: IIR authorised by

Covidien Ltd. 11 July 2008

Update Report – 2Q 08 Results

Strategic acquisitions and new product launches to boost sales growth

NYSE HOLD Fundamental research indicates a 1% upside in the NYSE common stock over the next 6-24 months.
Direct access to
We have calculated the the
based onfree of charge
fundamental factors,at
using a weighted average of target
prices obtained using DCF and comparative valuation methodologies.
Ticker: COV
Target price: US$49.37
Current price: US$48.96 We reiterate the NYSE common stock a HOLD rating with a 6-24 month target price of US$49.37 per

European BUY The European stock is expected to appreciate 21% over the next 6-24 months as the 1% fundamental
upside is augmented by 18 percentage points upside attributable to the anticipated appreciation of
Stock1 the USD against the Euro over the same period is further augmented by 2 percentage points upside
attributable to the anticipated reduction in the European stock discount2 over the same period. We
revert to a 6-24 month horizon as we now expect a significant currency impact on the European stock
over 6-24 months3.
Ticker: COV.F
Target price: €36.14
Current price: €29.96 We upgrade the European stock rating for Covidien from a SELL to a BUY with a 6-24 month target
price of US$36.14 per share.

Supervisor: Ujwal Shah

Analyst: Rupainka Rajan Investment horizon - short term actionable trading strategies
Editor: Adil Bahar, PhD This report addresses the needs of strategic investors with a long term investment horizon of 6-24 months. If
Global Research Director: this report is provided to you by your broker under the Global Settlement, you may now also access (free of
Satish Betadpur, CFA charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available on-line only at
Next news due:
3Q 08 results, 05 August 2008
Report summary
Covidien Ltd’s (Covidien) 2Q 08 sales were marginally above our expectation, primarily due to higher
than anticipated sales from the Imaging Solutions business. Robust sales growth during the quarter is
primarily attributable to strong growth across its key business segments, namely; Imaging Solutions
and Medical devices. Going forward, we believe the company’s strategic acquisitions in areas will
support its revenue and profitability growth. Furthermore, the company’s upcoming launches during
FY 2008 are also expected to support sales growth, going forward. Margins are also expected to
improve due to the company’s restructuring program. Hence, our outlook for the company remains
broadly unchanged.

Currency impact on the European stock

The impact by itself of the anticipated currency movements on the European stock (now €29.96),
without considering changes in the share price, is positive and is expected to be:

Over 6 months: €28.12

Over 12 months: €31.50
Over 24 months: €35.00

Page 1 Refer to page 5 for all footnotes