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Why Is Medtronic (MDT) Down 4.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Medtronic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Medtronic Q1 Earnings, Revenues Top Estimates
Medtronic reported first-quarter fiscal 2022 adjusted earnings per share of $1.41, beating the Zacks Consensus Estimate by 6.8%. Adjusted earnings also showed a stupendous 127.4% improvement from the year-ago figure of 62 cents per share. Currency-adjusted earnings per share came in at $1.38 for the quarter.
Without certain one-time adjustments — including restructuring, acquisition, amortization expenses and certain European Union medical device regulations charges — GAAP earnings per share was 56 cents, reflecting a 55.6% surge from the year-ago reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.99 billion, up 19% on an organic basis (excluding the impacts of currency) and 22.7% on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.7%. In the quarter under review, U.S. sales (51% of total revenues) rose 22% year over year on a reported basis to $4.1 billion. Non-U.S. developed market revenues totaled $2.6 billion (33% of total revenues), depicting a 20% improvement on a reported basis (up 11% on an organic basis).
Emerging market revenues (16% of total revenues) amounted to $1.27 billion, up 31% on a reported basis (up 25% organically).
Segment Details
The company currently generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio, and Diabetes.
In the fiscal first quarter, Cardiovascular revenues rose 15% at CER to $2.89 billion, reflecting low-twenties organic growth in SHA, mid-teens organic growth in CRHF, and high-single digit growth in CPV. CRHF sales totaled $1.48 billion, up 15% year over year at CER. Revenues from SHA were up 21% at CER to $787 million. CPV revenues were up 7% at CER to $620 million.
In Medical Surgical, worldwide sales totaled $2.32 billion, marking a 25% year-over-year improvement at CER with high-thirties organic growth in SI and mid-single digit organic growth in RGR. SI rose 39% while RGR registered an improvement of 3% both at CER.
In Neuroscience, worldwide revenues of $2.2 billion were up 26% year over year at CER, driven by high-thirties growth in Neuromodulation and Specialty Therapies and high-teens growth in CST, all on an organic basis. Cranial and Spinal Technologies reported 17% rise at CER. Sales in Specialty Therapies and Neuromodulation both were up 37% year over year at CER.
Revenues at the Diabetes group fell 3% at CER to $572 million. The quarter registered high single-digit growth in durable pumps, including strong growth in international markets on the continued launch of the MiniMed 780G system. This growth however was offset by mid-teens declines in U.S. sales of consumables and continuous glucose monitoring (CGM) products.
Margins
Gross margin in the reported quarter expanded 597 basis points (bps) to 67.5% on a 34.7% rise in gross profit to $5.39 billion. Adjusted operating margin expanded 1138 bps year over year to 26.2%. Selling, general and administrative expenses rose 5.4% to $2.55 billion. Research and development expenses increased 20.8% to $750 million.
Guidance
Medtronic has updated its fiscal 2022 financial guidance.
The company continues to expect organic revenue growth of approximate 9% from fiscal 2021. Considering current foreign exchange rate, fiscal 2022 revenues are expected to be positively impacted by $100 to $200 million. The Zacks Consensus Estimate for the company’s fiscal 2022 worldwide revenues is pegged at $33.29 billion.
The lower end of the full-year adjusted earnings per share guidance has been raised this time to a range of $5.65 to $5.75 including an estimated 5 to 10 cents positive impact from foreign exchange (the earlier band was $5.60 to $5.75 on an estimated 10 to 15 cents positive foreign exchange impact). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.68.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Medtronic has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Medtronic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Medtronic (MDT) Down 4.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Medtronic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Medtronic Q1 Earnings, Revenues Top Estimates
Medtronic reported first-quarter fiscal 2022 adjusted earnings per share of $1.41, beating the Zacks Consensus Estimate by 6.8%. Adjusted earnings also showed a stupendous 127.4% improvement from the year-ago figure of 62 cents per share. Currency-adjusted earnings per share came in at $1.38 for the quarter.
Without certain one-time adjustments — including restructuring, acquisition, amortization expenses and certain European Union medical device regulations charges — GAAP earnings per share was 56 cents, reflecting a 55.6% surge from the year-ago reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.99 billion, up 19% on an organic basis (excluding the impacts of currency) and 22.7% on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.7%.
In the quarter under review, U.S. sales (51% of total revenues) rose 22% year over year on a reported basis to $4.1 billion. Non-U.S. developed market revenues totaled $2.6 billion (33% of total revenues), depicting a 20% improvement on a reported basis (up 11% on an organic basis).
Emerging market revenues (16% of total revenues) amounted to $1.27 billion, up 31% on a reported basis (up 25% organically).
Segment Details
The company currently generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio, and Diabetes.
In the fiscal first quarter, Cardiovascular revenues rose 15% at CER to $2.89 billion, reflecting low-twenties organic growth in SHA, mid-teens organic growth in CRHF, and high-single digit growth in CPV. CRHF sales totaled $1.48 billion, up 15% year over year at CER. Revenues from SHA were up 21% at CER to $787 million. CPV revenues were up 7% at CER to $620 million.
In Medical Surgical, worldwide sales totaled $2.32 billion, marking a 25% year-over-year improvement at CER with high-thirties organic growth in SI and mid-single digit organic growth in RGR. SI rose 39% while RGR registered an improvement of 3% both at CER.
In Neuroscience, worldwide revenues of $2.2 billion were up 26% year over year at CER, driven by high-thirties growth in Neuromodulation and Specialty Therapies and high-teens growth in CST, all on an organic basis. Cranial and Spinal Technologies reported 17% rise at CER. Sales in Specialty Therapies and Neuromodulation both were up 37% year over year at CER.
Revenues at the Diabetes group fell 3% at CER to $572 million. The quarter registered high single-digit growth in durable pumps, including strong growth in international markets on the continued launch of the MiniMed 780G system. This growth however was offset by mid-teens declines in U.S. sales of consumables and continuous glucose monitoring (CGM) products.
Margins
Gross margin in the reported quarter expanded 597 basis points (bps) to 67.5% on a 34.7% rise in gross profit to $5.39 billion. Adjusted operating margin expanded 1138 bps year over year to 26.2%. Selling, general and administrative expenses rose 5.4% to $2.55 billion. Research and development expenses increased 20.8% to $750 million.
Guidance
Medtronic has updated its fiscal 2022 financial guidance.
The company continues to expect organic revenue growth of approximate 9% from fiscal 2021. Considering current foreign exchange rate, fiscal 2022 revenues are expected to be positively impacted by $100 to $200 million. The Zacks Consensus Estimate for the company’s fiscal 2022 worldwide revenues is pegged at $33.29 billion.
The lower end of the full-year adjusted earnings per share guidance has been raised this time to a range of $5.65 to $5.75 including an estimated 5 to 10 cents positive impact from foreign exchange (the earlier band was $5.60 to $5.75 on an estimated 10 to 15 cents positive foreign exchange impact). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.68.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Medtronic has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Medtronic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.