The 2014 All-America Research Team: Medical Supplies & Devices, No. 1: Michael Weinstein


< The 2014 All-America Research Team


Michael WeinsteinJ.P. MorganFirst-Place Appearances: 11

Total Appearances: 17

Analyst Debut: 1998All-America Research Team Hall of Fame analyst Michael Weinstein extends his frontrunning streak to an eighth year and elevates his total number of appearances at No. 1 on this roster to 11. “Mike has been covering the space longer than anybody else,” remarks one portfolio manager. “His experience leads him to gain insights well before the crowd.” U.S. manufacturers of medical supplies and devices saw their shares climb 12.7 percent in 2014 through mid-September, against the broad domestic market’s gain of 7.3 percent, and Weinstein believes that trend will continue. “We expect modest outperformance over the balance of the year,” the 44-year old researcher says. He has been closely monitoring the potential merger between sector heavyweights Covidien and Medtronic. In mid-June, Minneapolis-based Medtronic, the U.S.’s second-largest medical device manufacturer, announced its intention to acquire Irish rival Covidien for $42.9 billion and relocate its base for tax purposes to Dublin. Believing that the tie-up would create significant value, he pounded the table on both names, advising clients that “the deal turns Medtronic from a company with a large, arguably unsustainable capital allocation strategy and commitment to return 50 percent of free cash flow to shareholders, with only 35 to 40 percent annually being generated in the U.S., to one with significant capacity for higher dividends and increased shareholder returns.” By mid-September, Covidien’s New York Stock Exchange–listed shares had jumped 26.1 percent, to $90.47, while Medtronics’ had advanced 7.5 percent, to $64.95. During the same period the sector gained 6 percent. The merger is expected to be completed by early next year, and the researcher’s respective year-end 2015 price objectives for the stocks are $110 and $78. Weinstein also wins investor praise for “pushing back on managements when they puff up earnings,” in the words of one admirer, who also credits him for “intelligently grooming analysts on his team and allowing them to become subject matter experts — meaning that he prefers to share the spotlight versus spread himself too thin.”