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Medtronic Banks on Ventilator Sales Amid Coronavirus Crisis

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On Jul 14, we issued an updated research report on Medtronic plc (MDT - Free Report) . Increased adoption of the company's globally-accepted advanced therapies is encouraging. The stock currently carries a Zacks Rank #3 (Hold).

Medtronic saw significant growth in airways and ventilators sales in the fourth quarter of fiscal 2020 on higher worldwide demand to meet COVID-19 related patient needs. Accordingly, Medtronic had to significantly ramp up production, which led doubling up of ventilator revenues in the fourth quarter.

Further, Medtronic also noted growth in sales of some of its core products and services that played a role in fighting COVID-19, and specific products that customers were stocking ahead of the pandemic. This led to greater-than-expected growth in a select few of its businesses, diabetes products being one of those. In the fiscal fourth quarter, the company noted increase in demand for diabetes supplies, including continuous glucose sensors and infusion sets, particularly in international markets.

Medtronic PLC Price

 

It is currently focusing on the geographical diversification of its businesses, apart from product innovation. Also, Medtronic demonstrated a strong solvency position.

On the flip side, in the fourth quarter, the company registered dismal performance in all major business segments and geographies. The company’s performance was primarily impacted by deferred procedures in almost each of its business segments due to the pandemic as in this time governments across the world implemented restrictions on elective procedures while healthcare systems diverted their attention and resources to fighting COVID-19.

Escalating costs and expenses persistently put pressure on its margins. Unfavorable currency movement once again dampened growth in the quarter.

Over the past six months, Medtronic has underperformed the industryit belongs to. The stock has declined 20.4% compared with the industry's 11.6% fall in the said time frame.

Zacks Rank & Key Picks

Currently, Medtronic carries a Zacks Rank #4 (Sell).

A few better-ranked stocks from the broader medical space include Quest Diagnostics Incorporated (DGX - Free Report) , Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp and QIAGEN N.V. (QGEN - Free Report) .

Quest Diagnostics’ long-term earnings growth rate is projected at 7.6%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LabCorp’s long-term earnings growth rate is estimated at 6.1%. The company presently sports a Zacks Rank #1.

QIAGEN’s long-term earnings growth rate is estimated at 18.3%. It currently sports a Zacks Rank #1.

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