Medtronic completed its merger with Covidien on Jan. 27, marking the beginning of what could be a very strong year for the company, if everything falls into place.
In a Seeking Alpha article, Eric Li argues 2015 will be a strong year for the company. Here are eight reasons why:
1. Medtronic surpassed Johnson & Johnson as the world's largest medical technology producer when the merger with Covidien closed, with the closing stock price at $75.59.
2. Covidien is based in Ireland, and the acquisition means Medtronic can legally move headquarters overseas for product expansion as well as lower tax rates; Ireland's tax rate is 12.5 percent, compared to the United States at 35 percent.
3. Shareholders will see much of the $14 billion cash holdings.
4. Medtronic originally announced plans to merge with Covidien in June 2014, and since then the stock has risen 15.26 percent, beating the Dow and S&P by 10 percent.
5. Covidien added vascular and lung cancer care products to Medtronic's business lines and synergies are predicted to reach $850 million pre-tax at the end of the fiscal year in 2018.
6. The merger established a larger research and development base with more diversified products.
7. Currently, $13 billion of the company's $27 billion in revenue comes from outside the United States, and the ability to reach emerging markets and new capital markets could lead to stronger cash flow.
8. There is still huge growth potential within the orthopedic market as the world's aging population increases.