In 2012, the S&P 500 Healthcare Equipment & Supply index was up 15.1%, while the S&P 500 was up 13.4%. However, it was in-line with the broader S&P 500 Healthcare index, which was up 15.2%. This year, the index is up 14.6% thus far, but it is underperforming the Healthcare index. The analysts at Deutsche Bank A.G. (NYSE: DB) have done a close analysis of the top names in the sector and have a short list of names to buy.

Even though they only have four stocks to buy, and one other top name to consider, the Deutsche Bank team is very bullish on their top names. With most reimbursement issues settled for at least the time being, investors may have an opportunity to buy the leaders at a discount.

Covidien PLC (NYSE: COV) has one of the best top line growth profiles within the large cap med tech universe, and together with operational and financial leverage, it should sustain double-digit EPS growth. Deutsche Bank believes that longer term, the pharmaceutical spin-off on June 28 will create even more shareholder value. Their target price for the stock is $74. The Thomson/First Call estimate is at $72.50. Shareholders receive a 1.6% dividend.

St. Jude Medical Inc. (NYSE: STJ) had a potential issue with Durata leads, the wire used to connect lifesaving defibrillators to the heart. Deutsche Bank and others believe there is no issue with the leads and a robust pipeline will lead to continued growth. The Deutsche Bank target price is $52, while the consensus is at $47. Investors are paid a 2.3% dividend.

Stryker Corp. (NYSE: SYK) is a stock to buy based on valuation that Deutsche Bank views as attractive. The analysts also believe that Strykers diversified business model should provide for steady and above-peer growth. The price target for the stock is $75, and the consensus target is $60. Shareholders are paid a 1.6% dividend.

Johnson & Johnson (NYSE: JNJ) is perhaps the most diversified stock of the group. The Deutsche Bank team believe that all three of its divisions should see steady-to-improving trends. Within Pharmaceuticals, the new products already have started to accelerate growth, and they expect additional pipeline milestones ahead. In Medical Device & Diagnostics, the integration of Synthes seemingly is going well, and to the extent utilization trends slightly improve, it should accelerate growth. Within Consumer, the analysts believe the worst is likely behind for the McNeil OTC franchises. The price target for this top name is $92. The consensus estimate is $90.50. Investors are paid a solid 3.1% dividend.

Boston Scientific Corp. (NYSE: BSX) is a wildcard name at Deutsche Bank. The 2006 purchase of Guidant burdened the company with an onerous debt load. Though the stock is only rated Neutral, the analysts believe management is doing the right things by restructuring, refocusing and repositioning the company. Recent results have been positive also. Restoring the company to consistent top line growth is contingent on continued stability of the end markets and pipeline success, the latter of which there is still some uncertainty around magnitude and timing. Boston Scientific has been a rumored takeover candidate for years. If the stock price stays in the single digits, it may remain one. Deutsche Bank has a $9 price target, but the consensus is lower at $8.30.

For years the medical device industry was one of the top sectors on Wall Street. Innovation and an aging population presented investors with the perfect storm. Recently though, product failures, government regulation and reimbursement issues have muddied the water. This is no doubt one of the reasons Deutsche Bank is so selective.

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