JP Morgan Updates Model On Covidien

JP Morgan has published a research report on Covidien (NYSE: COV) and has updated the model forecast for 2011.

In the report, JP Morgan writes "Our FY11 forecast calls for revenues of $11.35B (+8.8% reported, +2.6% organic) and EPS of $3.62 (+6.9%). For F1Q, we forecast revenues of $2.727B (+3.1% reported, +0.1% organic) and EPS of $0.81 (-3.8%). On an NTM basis, COV trades at a P/E of 12.3x, in line with the large-cap MedTech group average and a more notable discount to the hospital supplier group. Our December 2011 price target of $52 is based on 12.5x our CY2012 earnings estimate. We foresee multiple expansion from current levels for Covidien as well as the MedTech and Hospital supplier groups moving through 2011. While Covidien faces a series of challenges in its core businesses, we are comfortable arguing for modest multiple expansion based on the strength and diversity of Covidien's franchise as well as the company's ability to drive operating leverage and solid free cash flow."

JP Morgan maintains its Overweight rating and $52 price target.

Covidien closed Friday at $45.99.