Irish drug and medical device maker Covidien PLC’s guidance, announced Thursday, that it expects slower sales growth in fiscal 2012 largely fell in line with expectations on Wall Street, The Associated Press reports. Covidien has a surgical-tools plant in North Haven.
Covidien said it expects revenue to grow between 3 percent and 5 percent for fiscal 2012, which starts later this month. That compares to the company’s prediction in April that its fiscal 2011 revenue would grow 8 to 11 percent, which implies a total of $11.26 billion to $11.58 billion.
For fiscal 2012, Covidien said revenue from its medical device business, which is its biggest division, will grow 4 to 7 percent. It said pharmaceutical revenue will rise by 2 to 5 percent, and revenue from its medical supply unit will be flat.
The company is expecting a slowdown in medical device sales, but it also expects pharmaceutical revenue to grow in fiscal 2012 after declining in the current fiscal year.
Analysts expect Covidien to report $12.03 billion in revenue in fiscal 2012, with earnings of $4.30 per share, according to FactSet.
The company’s sale and rough earnings guidance fell in line with Wall Street expectations, said Citi analyst Matthew Dodd in a research note, adding that Covidien management “appears to have built some conservatism into these forecasts.”
Jefferies analyst Raj Denhoy said in a separate not the company acknowledges continued pressure in procedure volumes and pricing.
RBC Capital Markets analyst Glenn Novarro said he still sees the company as a “good place to hide” in a tough environment, especially given continued weak use of health care and growing talk of Medicare/Medicaid cuts.
