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The Zacks Analyst Blog Highlights: Applied Materials, Covidien, Johnson & Johnson, Becton Dickinson and C.R. Bard

AMAT COV JNJ BDX BCR

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For Immediate Release

Chicago, IL – March 8, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Applied Materials Inc. ( (AMAT - Analyst Report), Covidien ( (COV - Analyst Report), Johnson & Johnson ( (JNJ - Analyst Report), Becton Dickinson ( (BDX - Analyst Report) and C.R. Bard ( (BCR - Analyst Report).

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Here are highlights from Wednesday’s Analyst Blog:

Applied Materials Ups Buyback, Hikes Dividend

After reporting an encouraging first quarter last month, Applied Materials Inc. ( (AMAT - Analyst Report), the leading producer of chip making equipment, has authorized the repurchase of shares up to an additional value of roughly $3.0 billion over the next three years. The company has less than $1.0 billion available under the existing buyback plan which was started in 2010.

Additionally, the company also announced its decision to hike quarterly dividend by one cent to 9 cents per share. This translates into a 13% increase from the prior dividend. The increased dividend will be paid on June 14, 2012, to stockholders of record on May 24, 2012. Prior to this announcement, AMAT had been paying a quarterly dividend of 8 cents per share.

We believe that continuous share buybacks and a hike in dividend will inspire investor loyalty through higher returns from the stock.

During the recently concluded first quarter, Applied Materials spent $200 million on share repurchases and $104 million on dividends. The cash and short-term investments balance was $2.0 billion at quarter-end, having declined $4.2 billion during the quarter due to the cash paid for the Varian acquisition during the quarter. The debt cap ratio including long-term liabilities and short-term debt was just 22.1%. We remain encouraged by Applied Materials’ strong cash position and its ability to service its long-term debts.

Applied Materials reported decent first quarter results, with both revenue and earnings per share surpassing our expectations. The company provided a strong revenue outlook for the second quarter, which was up 5–15% sequentially. Applied Materials’ strong position in the semiconductor market, improving business, both on account of stronger end markets and the Varian acquisition, the solar business in China, its huge portfolio and strategic relationships are all positives.

The regular share buybacks and dividend hikes are a good way of encouraging investor confidence as it returns shareholder value. The company expects to post better results in the second quarter than estimated by the analysts. The increase in dividend indicates that the company is heading toward strong future growth.

Applied Materials holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

FDA Nod for Covidien’s Solitaire

International health care products major Covidien ( (COV - Analyst Report) has won the green signal of the U.S. Food and Drud Administration (“FDA”) for its Solitaire FR revascularization device designed to restore blood flow to the brain in patients with acute ischemic stroke.

The device works by mechanically removing blood clots from blocked vessels. The Ireland-based company said that the product will be available in the U.S. starting April 2012.

Stroke, a potentially fatal condition, is the fourth leading cause of death in the U.S, according to the American Heart Association. Ischemic stroke occurs when a blood vessel carrying oxygen and nutrients to the brain is clogged by a clot. The disease afflicts roughly 700,000 Americans annually.

Solitaire FR’s U.S. regulatory application was based on the impressive results from the Solitaire With the Intention for Thrombectomy (“SWIFT”) study, in which it was compared with the Concentric Medical Merci Retriever device, a commercially available clot remover. The Solitaire FR demonstrated, in the trial, superior ability in restoring blood flow to the brain within eight hours of stroke onset. 

The Solitaire FR device is already approved outside the U.S. for the endovascular treatment of acute ischemic stroke, offering physicians with an innovative treatment technology over the existing therapy options.

Covidien is a leading global health care products company with a rich history of developing high-quality products in a cost-effective manner. It competes with Johnson & Johnson ( (JNJ - Analyst Report), Becton Dickinson ( (BDX - Analyst Report) and C.R. Bard ( (BCR - Analyst Report), among others.

Revenues from Covidien’s core Medical Devices segment climbed 6% year over year to $1.98 billion in the most recent quarter, powered by double-digit growth across Vascular and Energy Devices product-lines.

The Vascular business had another strong quarter with revenues soaring 17% to $387 million, spurred by double-digit growth of venous insufficiency and neurovascular products.

Covidien remains committed to rolling out new products and technologies, focusing on emerging markets, and boosting market share in core segments through investments in sales and marketing infrastructure. However, sustained pricing/procedure volume pressure represents a headwind. We are currently Neutral on the stock, supported by a short-term Zacks #3 Rank (Hold).

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