Companies such as Medtronic, Johnson & Johnson, and Abbott Laboratories will be in the best position to take advantage of mergers and acquisitions opportunities in the next few years. Other companies that are in a good position to benefit include Covidien, Stryker, Zimmer, and St. Jude Medical, all of which “have a fair amount of cash on their balance sheet and could benefit from purchasing faster-growing technologies.”

This was just one assessment of Joanne K. Wuensch, a research analyst in for BMO Capital Markets Corp. Wuensch covers medical technology companies in the cardiology, ophthalmology, orthopedic, and respiratory sectors. She made her assessment in an interview with The Wall Street Transcript.

She says that because device companies are aware that the impending healthcare reform tax will be a 2.3% excise tax, it gives medical technology companies the ability to value potential acquisitions and plan for the future. In 2009, she notes that there were 23 M& A transactions above $68 million, with only two above $1 billion. This compares with 2007’s 40 transactions, of which12 were above $1 billion. The outlook for the next 12–18 months is “prime for consolidation,” she says.

She also notes that this environment will benefit the stocks of the smaller companies being acquired. She pointed to the acquisitions that took place over the past 18 months, including Covidien’s purchase of VNUS Medical, Medtronic’s purchase of both Invatec and CoreValve, and Abbott’s purchase of Advanced Medical Optics. She also predicts that much of the activity will begin sooner rather than later as large-cap companies recover and have cash on the balance sheet.

Other articles below also look at how the market is shaping up for the new year.