ANALYST SAYS MEDTRONIC PROSPECTS IN DOUBT, BUT FIRM LOOKS AT BRIGHT SIDE

Medtronic's prospects look dim to some, but the company is focusing on the positive aspects of its business.

Investors should refrain from buying stock in Medtronic "as we believe the company is entering a phase of reduced competitiveness in many of its key business units, and the expectations it has set for re-gaining ICD [implantable cardioverter-defibrillators] market share seem unlikely to be met," said analyst Alexander Arrow of Lazard Capital Markets.

Management may have created ICD revenue expectations that it won't meet, and neither of the firm's two main ICD competitors are likely to cede market-share points, Arrow said.

Another risk is a longer depression in the U.S. market for ICDs if public perception of the devices cannot be restored in six months, Arrow added.

In related news, Medtronic's report of disappointing quarterly earnings and a falling share price spurred speculation that Johnson & Johnson might consider buying the firm.

But the company appears determined to prove naysayers wrong. "We are encouraged by the strength of our new product pipeline, and we continue to make investments in R&D, market development and operating infrastructure to support future growth," said Art Collins, the firm's chairman and CEO, Aug. 22.