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Medtronic Poised on Strong Fundamentals Despite Several Woes
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On Feb 23, we issued an updated research report on medical device major, Medtronic plc (MDT - Free Report) .
Medtronic posted better-than-expected fiscal third-quarter results with both earnings and revenues ahead of the Zacks Consensus Estimate. All major business groups contributed to solid top-line growth at CER indicating sustainability across groups and regions. However, escalating costs and expenses weighed on margins. Also, unfavorable foreign exchange continues to remain a drag.
This was reflected in the company’s share price trend too. In the past six months, Medtronic consistently traded below the Zacks categorized Medical - Products industry.
Per the last share price movement, overall the company lost 5.42%, as against 0.27% gain of the broader industry, over this period. A dull fiscal guidance fails to indicate any chances of respite soon. Further price-fixing issue in China has added to its woes.
On a positive note, a consistent and gradually stabilizing movement in the global Cardiac Rhythm & Heart Failure (CRHF) market can be observed. This should improve further, over the coming quarters.
Meanwhile, post the Covidien acquisition, the consolidated company has so far successfully demonstrated strong segmental performance, reflecting successful integration and achievement of synergy targets.
We also note that, despite facing severe macroeconomic pressures, Medtronic saw the emerging markets demonstrate 11% growth in the last reported quarter which contributed nearly 14% to the company’s overall revenue growth.
The growth remained in line with the company’s 150−200 basis points expectations, despite the dismal sales performance in the Middle East where revenues declined in low-single-digits on falling oil prices. In the reported quarter, businesses in China, Latin America, and Eastern Europe showed sustained strength, growing in the mid-teens or higher.
Zacks Rank & Key Picks
Medtronic currently carries a Zacks Rank #3 (Hold). Better-ranked medical stocks include Glaukos Corporation (GKOS - Free Report) , Cardiovascular Systems and Neogen Corp. (NEOG - Free Report) . Glaukos sports a Zacks Rank #1 (Strong Buy) while Cardiovascular Systems and Neogen carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos gained over 100% in the last one year compared with the S&P 500’s gain of 22.4%. The company has a stellar four-quarter average earnings surprise of over 100%.
Cardiovascular Systems surged over 100% in the last one year compared with the S&P 500. It has a four-quarter average earnings surprise of 67.8%.
Neogen gained 34.1% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth rate of 16.7% for the next five years compared with the industry average of 15.2%.
Zacks' Top 10 Stocks for 2017
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Medtronic Poised on Strong Fundamentals Despite Several Woes
On Feb 23, we issued an updated research report on medical device major, Medtronic plc (MDT - Free Report) .
Medtronic posted better-than-expected fiscal third-quarter results with both earnings and revenues ahead of the Zacks Consensus Estimate. All major business groups contributed to solid top-line growth at CER indicating sustainability across groups and regions. However, escalating costs and expenses weighed on margins. Also, unfavorable foreign exchange continues to remain a drag.
This was reflected in the company’s share price trend too. In the past six months, Medtronic consistently traded below the Zacks categorized Medical - Products industry.
Per the last share price movement, overall the company lost 5.42%, as against 0.27% gain of the broader industry, over this period. A dull fiscal guidance fails to indicate any chances of respite soon. Further price-fixing issue in China has added to its woes.
On a positive note, a consistent and gradually stabilizing movement in the global Cardiac Rhythm & Heart Failure (CRHF) market can be observed. This should improve further, over the coming quarters.
Meanwhile, post the Covidien acquisition, the consolidated company has so far successfully demonstrated strong segmental performance, reflecting successful integration and achievement of synergy targets.
We also note that, despite facing severe macroeconomic pressures, Medtronic saw the emerging markets demonstrate 11% growth in the last reported quarter which contributed nearly 14% to the company’s overall revenue growth.
The growth remained in line with the company’s 150−200 basis points expectations, despite the dismal sales performance in the Middle East where revenues declined in low-single-digits on falling oil prices. In the reported quarter, businesses in China, Latin America, and Eastern Europe showed sustained strength, growing in the mid-teens or higher.
Zacks Rank & Key Picks
Medtronic currently carries a Zacks Rank #3 (Hold). Better-ranked medical stocks include Glaukos Corporation (GKOS - Free Report) , Cardiovascular Systems and Neogen Corp. (NEOG - Free Report) . Glaukos sports a Zacks Rank #1 (Strong Buy) while Cardiovascular Systems and Neogen carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos gained over 100% in the last one year compared with the S&P 500’s gain of 22.4%. The company has a stellar four-quarter average earnings surprise of over 100%.
Cardiovascular Systems surged over 100% in the last one year compared with the S&P 500. It has a four-quarter average earnings surprise of 67.8%.
Neogen gained 34.1% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth rate of 16.7% for the next five years compared with the industry average of 15.2%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>