"Mindray Medical International (NYSE:MR), based in Shenzhen, China and run by entrepreneurs, is a great defensive growth play," says Ian Wyatt in Top Stock Insights. Here's his review.
"This maker of medical devices boasts a strong brand and sales network with heavy investments in R&D and a smorgasbord of products.
"Its products include: patient monitoring and life support systems, in-vitro diagnostic products and medical imaging systems for humans … and animals.
"Morgan Stanley analysts say, 'The medical devices industry represents the best investment opportunity in the healthcare space, and Mindray will remain the industry leader going forward.'
"Although Mindray is currently doing better overseas, China's health-care reform should present more domestic and rural opportunities for them and handsome profits for shareholders. The primary reasons we like the stock are:
- Market leader in China and expanding aggressively outside this market.
- Solid balance sheet and positive cash flows.
- Margins are weakening, but revenue remains strong.
- Vertically integrated, which may allow for timelier cost-cutting measures.
- Poised for strong organic growth.
- Datascope merger is reflected in 2009 numbers.
"Mindray reported net revenues of $547.5 million for the full year 2008, an 86% increase from $294.3 million for full year 2007.
"Net revenues generated in international markets in the full year 2008 increased 110.4% to $313.1 million, while net revenues generated in China in the full year 2008 increased 61.1% to $234.5 million.
"The company expects its full year 2009 net revenue to be at least 20% higher than its full year 2008 net revenue, and its capital expenditure for 2009 to be in the range of $40 million to $60 million. Mindray will report first-quarter 2009 earnings on May 12.
"The shares appea cheap right now. Based on our current financial projections, shares of Mindray trade at 17.5 times current year and 14 times forward year EPS.
"We expect earnings will grow 27% in 2010 over this year's estimate of $1.30. Given this strong growth rate, shares of Mindray should be trading at least 18 times forward year EPS. This conservative multiple corresponds to a $30 target price.
"Overall, this stock carries above average risk with a huge potential reward. We expect the Chinese markets will remain dominant in 2009 and health-care will continue to be an excellent market sector."
"Health care is the industry of the future," says
