Have You Overlooked This Mid Cap Medical Technology and Systems Stock? CFN, IHI & XHE

Overlooked mid cap medical technology and systems stock CareFusion Corporation (NYSE: CFN) could offer nice growth in the healthcare space, meaning its worth taking a closer look at the stock along with the performance of potential benchmarks like the iShares Dow Jones US Medical Device ETF (NYSEARCA: IHI) and SPDR S&P Health Care Equipment ETF (NYSEARCA: XHE). I should mention that we have recently added CareFusion Corporation to our SmallCap Network Elite Opportunity (SCN EO) portfolio because the stock continues to be in a long-term thrusting patter and we believe its also undervalued based on current valuation.

What is CareFusion Corporation?

Mid cap CareFusion Corporation is a global corporation serving the health care industry with products and services that help hospitals measurably improve the safety and quality of care. The company's product families include Pyxis® for medication and supply dispensing, Alaris® for infusion, AVEA® ventilators, Jaeger® for respiratory diagnostic instruments, AVAmax® and PleurX® for interventional procedures, V. Mueller® and Snowden-Pencer® surgical instruments, and ChloraPrep® skin antiseptic.

As for potential performance benchmarks or medical device ETF peers, the iShares Dow Jones US Medical Device ETF tracks the Dow Jones U.S. Select Medical Equipment Index through investments in 50 medical devices stocks while the SPDR S&P Health Care Equipment ETF tracks the S&P Health Care Equipment Select Industry Index through 69 holdings.

What You Need to Know or Be Warned About CareFusion Corporation

In early February, CareFusion Corporation reported a 1% second quarter fiscal 2014 revenue increase to$922 million while adjusted income from continuing operations fell 4% to $116 million and remained even with the prior year at $0.54 per diluted share. The Chairman/CEO commented:

"Our team executed well during the quarter, with continued strength across the board in Procedural Solutions and in the Infusion Systems business line. During the quarter, we also secured a record number of committed contracts in the Dispensing Technologies business line, giving us the necessary momentum to drive strong second-half results. In addition, we made progress against our long-term strategy, gaining scale globally through the acquisitions of Sendal and Vital Signs and building a healthy innovation pipeline in Procedural Solutions."

During the last quarter, CareFusion Corporation invested $186 million to repurchase 4.8 million shares under a two-year $750 million share repurchase program and to date in fiscal 2014, the company has invested $375 million to repurchase 9.8 million shares. In addition, CareFusion Corporation has recently completed the acquisition of the Vital Signs division of GE Healthcare in the United States, China and certain other geographies plus the company has agreed to invest approximately $100 million for a 40% minority stake in Caesarea Medical Electronics (CME), an Israeli manufacturer of compact and highly portable infusion and syringe pumps for homecare and hospital settings.

Investors should also be aware that in early January, CareFusion Corporation announced a final settlement agreement with the government to pay $40.1 million to settle allegations it paid kickbacks and promoted its medical technology products for uses not approved by the FDA. The deal also resolves claims that CareFusion paid more than $11.6 million in kickbacks to a physician who co-chaired the Safe Practices Committee at the National Quality Forum while Cynthia Kirk, a former CFN vice president who initially filed a whistleblower lawsuit under provisions of the False Claims Act, will receive $3.26 million. In the announcement, the Chairman/CEO commented:

"We are pleased to resolve this matter and are confident we have strong practices, processes and controls in place. We have made significant investments during the past several years to improve our quality and compliance systems, including our sales and marketing practices, and will continue to do so as part of our commitment to adhering to the highest standards and aligning with best global practices."

Otherwise, it should be mentioned that CareFusion Corporation has a trailing P/E of 23.47 and a forward P/E of 14.69 along with no dividend.

Share Performance: CareFusion Corporation vs IHI & XHE

On Wednesday, mid cap CareFusion Corporation fell 1.28% to $39.36 (CFN has a 52 week trading range of $32.48 to $41.98 a share) for a market cap of $8.20 billion plus the stock is down 1.5% since the start of the year, up 13.5% over the past year and up 112.8% over the past five years. Here is a look at the performance of mid cap CareFusion Corporation verses medical device ETFs iShares Dow Jones US Medical Device ETF and SPDR S&P Health Care Equipment ETF:

As you can see from the above performance chart, the performance of mid cap CareFusion Corporation has largely mirrored that of benchmarks iShares Dow Jones US Medical Device ETF and SPDR S&P Health Care Equipment ETF.

Finally, here is a look at the latest technical charts for all three investments:

The Bottom Line. At the very least, mid cap CareFusion Corporation is worth a closer look at by any investor looking for exposure to the medical technology and systems space. 

SmallCap Network Elite Opportunity (SCN EO) has an open position in CFN. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.