The stock is now trading above the consensus price target of $106 given by the analysts. JP Morgan has a target of $116 which is not far away. Historic highs of around $113 have been touched again recently. It is up nearly 18% from its yearly low made in July. So it seems that the stock has done okay over the past few months and years. However, the fundamentals have not improved and the revenues and net income have fallen over the last few quarters. Even in Q1'13, the gross profit and net income fell on a yoy basis. The revenues showed a marginal growth of 1.6%. Earnings are likely to be $6.26 for the fiscal 2013, which implies modest growth. The stock is trading at around 20 times ttm earnings and the forward P/E multiple is around 14.5. Again, this implies that the growth is not likely to be too robust in the next couple of years. Declining margins make the price to sales ratio of 3 appear a little high. Even the leverage is not so comfortable with $1.4 billion debt. All this indicates that the growth in the stock from here on will stretch the valuations, unless the fundamentals show improvement. Growth in the medical devices companies is primarily based on the new products which they are able to bring to the market from time to time. Even for existing products it is important to innovate continuously. Building a patent portfolio around the proprietary technologies created by the company is equally important. Even a smaller company in the sector PLC Systems (PLCSF) which owns RenalGuard (a medical device for prevention of contrast induced neuropathy), has obtained numerous patents around its single product. For BCR, though Europe and Japan may be important markets, emerging markets are also important for supporting future growth.
