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In order to uphold investor confidence, neuromodulation company Cyberonics (CYBX - Analyst Report) disclosed the approval of a new share repurchase program with authorization to repurchase one million shares of the company’s outstanding common stock. However, the company did not specify the exact timing and duration of the share repurchase program nor did it reveal whether it will buyback shares in the open market or via private negotiations.

The authorization is expected to commence after the completion of the current buyback program that was initiated in November 2011. Following the second quarter of fiscal 2013, 360,000 shares were left under the ongoing program.

The announcement reflects Cyberonics’ confidence in its fundamentals. The company had available cash of more than $118 million (up 22.6% year over year) until the most recent quarter with no interest bearing debt on its balance sheet.

The stock is likely to appear more valuable on the back of the recent news. Investors viewed the news in positive light as reflected in the 4.47% increase in share price on Jan 28, 2013 (based on the adjusted closing price of $44.64).

With a positive earnings surprise in the last four quarters, Cyberonics has an average beat of 16.74%. Moreover, the company’s expected long-term earnings growth rate is 19%. The share repurchase program will allow Cyberonics to further leverage earning power going forward.

As estimates move higher for the current as well as the next fiscal for Cyberonics, the stock carries a Zacks Rank #1 (Strong Buy). Also worth mentioning in this context is that the stock has consistently outperformed the S&P 500 index as well as the S&P Healthcare Equipment Index since May 2010.

Other Stocks to Consider

Besides Cyberonics, other stocks in the medical sector which are expected to outperform are Cantel Medical , Haemonetics (HAE - Analyst Report) and ResMed (RMD - Analyst Report), each carrying a Zacks Rank #1.

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