Seidman Investment Portfolio Organization


Company: Medtronic
Sector: Healthcare (NYSE:MDT)

Medtronic, Inc. was established in 1949 and is headquartered in Minneapolis, Minnesota.  Medtronic is the world's largest manufacturer of implantable biomedical devices, with 41,000 employees and sales to over 120 countries.  The company produces a variety of devices ranging from pacemakers to stents and the majority of sales come from two divisions:  Neurological, Spinal, ENT, and Diabetes products (40.7% of 2008 sales) and cardiac rhythm management products (34.3% of 2008 sales).  In the future, Medtronic intends to expand on its core markets and plans to enter the epilepsy market.

IPO is holding MDT for several reasons.  Firstly, Medtronic is ideally positioned to benefit from the Graying of America as baby boomers age, they will have more need for Medtronic's best-of-breed implantable products.  Furthermore, despite recent economic turmoil, MDT increased earnings by 12% in fiscal year 2008 and has increased its dividend at a 15.5% annual rate over the last 5 years.  Finally, Medtronic has recently diversified out of the United States with international sales accounting for 38.4% of 2008 revenue.  This global diversification will allow We expect superior returns from Medtronic in the coming years, regardless of economic conditions.

Potential sources of concern include Medtronic's dependence on research and product development for future growth and the effects of pending health care reform legislation on the medical device industry.

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Page last modified March 11, 2012