Morgan Stanley Highlights From COV Analyst Day

Morgan Stanley is providing some highlights from Covidien's (NYSE: COV) analyst day.

“Covidien surprises in surgical dissection and sealing,” Morgan Stanley writes. “Further insights from SAGES are forthcoming but we wanted to highlight two points from Covidien's analyst day.

“While we expected new products here, Covidien's two- pronged effort comes a year earlier than we anticipated. Sonicision, announced today and launching this year, will compete with J&J's Harmonic Scalpel. Sonicision raises the bar on a sealing/dissection platform by eliminating the generator.

“While the patient benefit of this evolution is negligible, we expect physician interest to be substantial and drive share. Sonicision also improves on Harmonic Scalpel with a reusable battery and generator versus a fully disposable unit. Sonicision targets a segment of the market Covidien estimates at $800-850m of the overall $2.5B sealing and dissection market. Covidien's second entry in the segment at SAGES is the small jaw LigaSure.

“In its month since launch, the product has had a steep ramp relative to recent entries in this segment. Energy is a $0.99B business which grew 12%CC in F2010. Entry into ultrasound market supports visibility on double-digit growth.”

Covidien closed Thursday at $51.94.