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Medtronic's (MDT) Coronary Market Share Grows Amid Pandemic

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Increase in adoption of Medtronic plc's (MDT - Free Report) globally-accepted advanced therapies is encouraging. The stock currently carries a Zacks Rank #3 (Hold).

Over the past six months, Medtronic has outperformed the industry it belongs to. The stock has gained 14.4% compared with the industry's 4.7% rise.    

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 (scheduled to be reported on May 27), the company expects recovery and  return to growth. This expected recovery is just not driven by recovery from the pandemic but by the strong new product flow that Medtronic brought 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 were 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 has 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 high-single digits, with share gains in Renal Access.

In Restorative Therapies Group, Medtronic saw 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 have been 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 of the ongoing pandemic on businesses remains challenging to predict.

Key Picks

A few better-ranked stocks from the broader medical space are Owens & Minor, Inc. (OMI - Free Report) , National Vision Holdings, Inc. (EYE - Free Report) and Envista Holdings Corporation (NVST - Free Report) . While National Vision and Owens & Minor sport a Zacks Rank #1 (Strong Buy), Envista Holdings carries a Zacks Rank 2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.

Owens & Minor has a projected long-term earnings growth rate of 15%.

National Vision has a projected long-term earnings growth rate of 12%.

Envista Holdings has an estimated long-term earnings growth rate of 26%.

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