On Feb 26, we issued an updated research report on
Medtronic plc ( MDT Quick Quote MDT - Free Report) . Increased adoption of the company's globally-accepted advanced therapies is encouraging. The stock currently carries a Zacks Rank #3 (Hold).
While Medtronic’s third-quarter fiscal 2021 earnings were ahead of the Zacks Consensus Estimate, revenues came in line with the same.
On a positive note, in its fiscal fourth quarter, the company expects outpace competitors with its recovery and ability to return to growth. This expected recovery is just not driven by recovery from the pandemic but by the strong new product flow that Medtronicbrought to the market in the quarter.
Further, increasing tuck-in M&As and implementation of new operating model should add to the recovery momentum. The company noted signs of hospital customers preparing for a robust recovery. Purchases of capital equipment in the fiscal third quarter was strong.
Of late, Medtronic has been winning share in an increasing number of its businesses. With its pipeline coming to fruition, it is benefiting from product approvals across its business segments. Since the fiscal third quarter, the company received 46 product approvals, bringing the total to over 226 regulatory approvals in the United States, Europe, Japan and China since the start of calendar year 2020.
In Coronary, while the issue related to the China drug-eluting stent national tender continues, the company is currently winning share globally. In the fiscal third quarter, DES unit share was up 3 points year over year and 2 points sequentially, led by strong share gains in the United States on one-month dual-antiplatelet therapy labeling and expanded indication for high bleeding risk patients. In Gastrointestinal, the company had some modest share gains, driven in part by its partnership with the NHS in England. The NHS is using Medtronic’s PillCam Colon to help reduce large patient backlogs for colorectal screenings. Its Renal Care business grew in the high-single digits, with share gains in Renal Access. In Restorative Therapies Group, Medtronic registered seeing share gains across several businesses. In Cranial and Spinal Technologies, while its market share was stable year over year, it was up sequentially. With Mazor Robotics in hand, the company estimates to outsell its nearest competitor, Globus, within the spine robotics space. In Neuromodulation, the recent product rollouts are leading to share gains in both brain modulation and pain stim. Within pelvic health, Medtronic continues to win share back from Axonics based on the differentiation of InterStim Micro device.
On the flip side, Medtronic registered year-over-year decline in its third-quarter fiscal 2021 earnings and revenues. Barring Respiratory, Gastrointestinal, & Renal; Specialty Therapies; Neuromodulation and Diabetes Group, all other segments registered year-over-year decline in revenues on an organic basis reflecting the impact of the COVID-19 resurgence on procedure volumes in late December and January. Escalating costs and expenses put pressure on its margins.
While the company expects the impact from the COVID-19 resurgence to diminish, the effect from the ongoing pandemic to the businesses remains challenging to predict.
Over the past three months, Medtronic has underperformed the
industry it belongs to. As per the last share price movement, the stock has gained 4.8% compared with the industry's 9.4% rise. Key Picks
A few better-ranked stocks from the broader medical space are
Meridian Biosciences Inc. ( VIVO Quick Quote VIVO - Free Report) , Owens & Minor, Inc. ( OMI Quick Quote OMI - Free Report) and Envista Holdings Corporation ( NVST Quick Quote NVST - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of Zacks #1 Rank stocks here.
Meridian Biosciences has a projected long-term earnings growth rate of 61%.
Owens & Minor has a projected long-term earnings growth rate of 45%.
Envista has an expected long-term earnings growth rate of 24%.
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