Covidien PLC is about to release earnings. Ponder this Bear Case Scenario and consider if you still like the long case:
The firm’s soft tissue business still struggles due to J&J’s entry into the market.
Group purchasing organizations continue to garner more buying power and therefore put pressure on margins.
Regulators are getting tougher. To avoid or answer regulatory concerns R&D will go up as more and more testing will be required.
The company’s commodified trocars product line in the endomechanical business is facing difficult competition from Applied Medical. Growth is at risk.
George Gutowski writes from a caveat emptor perspective.