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Medtronic (MDT) Down 11.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 11.5% 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 Q2 Earnings Top Estimates, Cuts Revenue View
Medtronic reported second-quarter fiscal 2022 adjusted earnings per share of $1.32, which beat the Zacks Consensus Estimate by 3.1%. Adjusted earnings surged 29.4% from the year-ago adjusted figure. Currency-adjusted earnings per share came in at $1.28 for the quarter.
Without certain one-time adjustments — including certain amortization and restructuring expenses and acquisition-related gains among others — GAAP earnings per share was 97 cents, reflecting a 169.4% surge from the year-ago reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.85 billion, up 2% on an organic basis (excluding the impacts of currency) and 2.6% on a reported basis. The top line, however, lagged the Zacks Consensus Estimate by 1%.
In the quarter under review, U.S. sales (51% of total revenues) fell 1% year over year on a reported basis to $3.99 billion. Non-U.S. developed market revenues totaled $2.48 billion (32% of total revenues), depicting a 1% improvement on a reported basis (up 2% on an organic basis).
Emerging market revenues (17% of total revenues) amounted to $1.37 billion, up 20% on a reported basis (up 16% 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 second quarter, Cardiovascular revenues rose 3% at CER to $2.83 billion, reflecting mid-single-digit organic growth in Coronary & Peripheral Vascular (CPV) and low-single-digit organic growth in Cardiac Rhythm & Heart Failure (CRHF) and Structural Heart & Aortic (SHA). CRHF sales totaled $1.47 billion, up 2.8% year over year at CER. Revenues from SHA were up 2% at CER to $750 million. CPV revenues were up 6.3% at CER to $606 million.
In Medical Surgical, worldwide sales totaled $2.29 billion, unchanged year over year at CER. The quarter registered high-single-digit organic growth in Surgical Innovations (SI), partially offset by low double-digit organic declines in Respiratory, Gastrointestinal & Renal (RGR). Excluding the impact of ventilator sales declines, Medical Surgical revenues increased 6% organically.
In Neuroscience, worldwide revenues of $2.14 billion were up 3% year over year at CER, driven by high-single-digit growth in Specialty Therapies and mid-single-digit growth in Neuromodulation, partially offset by low-single-digit decline in Cranial & Spinal Technologies (CST), all on an organic basis.
Revenues at the Diabetes group rose 1% at CER to $585 million. Durable insulin pumps grew in the low-twenties, including high-teens growth in the United States and low-twenties growth in international markets on the continued launches of the MiniMed 770G and MiniMed 780G systems, respectively. However, this was offset by high-single digit sales decline in consumables.
Margins
Gross margin in the reported quarter expanded 355 basis points (bps) to 68.2% on an 8.3% rise in gross profit to $5.35 billion. Adjusted operating margin expanded 396 bps year over year to 26.2%. Selling, general and administrative expenses rose 0.6% to $2.62 billion. Research and development expenses increased 5.8% to $676 million.
Guidance
Medtronic has updated its fiscal 2022 financial guidance.
Considering the greater-than-expected market impact of the pandemic and healthcare system staffing challenges in the fiscal second quarter, which is expected to continue into the second half of fiscal 2022, Medtronic now expects fiscal 2022 organic revenue growth of 7-8% compared with the prior expectation of approximately 9%. Considering the current foreign exchange rate, fiscal 2022 revenues are now expected to be positively impacted by $0 to $50 million compared with the earlier expectation of a positive impact of $100 to $200 million.
The Zacks Consensus Estimate for the company’s fiscal 2022 worldwide revenues is pegged at $32.93 billion.
The full-year adjusted earnings per share guidance, however, has been reiterated in the range of $5.65 to $5.75 including an estimated 5 to 10 cents positive impact from foreign exchange. The Zacks Consensus Estimate for the year’s adjusted earnings is $1.28.
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, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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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Medtronic (MDT) Down 11.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 11.5% 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 Q2 Earnings Top Estimates, Cuts Revenue View
Medtronic reported second-quarter fiscal 2022 adjusted earnings per share of $1.32, which beat the Zacks Consensus Estimate by 3.1%. Adjusted earnings surged 29.4% from the year-ago adjusted figure. Currency-adjusted earnings per share came in at $1.28 for the quarter.
Without certain one-time adjustments — including certain amortization and restructuring expenses and acquisition-related gains among others — GAAP earnings per share was 97 cents, reflecting a 169.4% surge from the year-ago reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.85 billion, up 2% on an organic basis (excluding the impacts of currency) and 2.6% on a reported basis. The top line, however, lagged the Zacks Consensus Estimate by 1%.
In the quarter under review, U.S. sales (51% of total revenues) fell 1% year over year on a reported basis to $3.99 billion. Non-U.S. developed market revenues totaled $2.48 billion (32% of total revenues), depicting a 1% improvement on a reported basis (up 2% on an organic basis).
Emerging market revenues (17% of total revenues) amounted to $1.37 billion, up 20% on a reported basis (up 16% 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 second quarter, Cardiovascular revenues rose 3% at CER to $2.83 billion, reflecting mid-single-digit organic growth in Coronary & Peripheral Vascular (CPV) and low-single-digit organic growth in Cardiac Rhythm & Heart Failure (CRHF) and Structural Heart & Aortic (SHA). CRHF sales totaled $1.47 billion, up 2.8% year over year at CER. Revenues from SHA were up 2% at CER to $750 million. CPV revenues were up 6.3% at CER to $606 million.
In Medical Surgical, worldwide sales totaled $2.29 billion, unchanged year over year at CER. The quarter registered high-single-digit organic growth in Surgical Innovations (SI), partially offset by low double-digit organic declines in Respiratory, Gastrointestinal & Renal (RGR). Excluding the impact of ventilator sales declines, Medical Surgical revenues increased 6% organically.
In Neuroscience, worldwide revenues of $2.14 billion were up 3% year over year at CER, driven by high-single-digit growth in Specialty Therapies and mid-single-digit growth in Neuromodulation, partially offset by low-single-digit decline in Cranial & Spinal Technologies (CST), all on an organic basis.
Revenues at the Diabetes group rose 1% at CER to $585 million. Durable insulin pumps grew in the low-twenties, including high-teens growth in the United States and low-twenties growth in international markets on the continued launches of the MiniMed 770G and MiniMed 780G systems, respectively. However, this was offset by high-single digit sales decline in consumables.
Margins
Gross margin in the reported quarter expanded 355 basis points (bps) to 68.2% on an 8.3% rise in gross profit to $5.35 billion. Adjusted operating margin expanded 396 bps year over year to 26.2%. Selling, general and administrative expenses rose 0.6% to $2.62 billion. Research and development expenses increased 5.8% to $676 million.
Guidance
Medtronic has updated its fiscal 2022 financial guidance.
Considering the greater-than-expected market impact of the pandemic and healthcare system staffing challenges in the fiscal second quarter, which is expected to continue into the second half of fiscal 2022, Medtronic now expects fiscal 2022 organic revenue growth of 7-8% compared with the prior expectation of approximately 9%. Considering the current foreign exchange rate, fiscal 2022 revenues are now expected to be positively impacted by $0 to $50 million compared with the earlier expectation of a positive impact of $100 to $200 million.
The Zacks Consensus Estimate for the company’s fiscal 2022 worldwide revenues is pegged at $32.93 billion.
The full-year adjusted earnings per share guidance, however, has been reiterated in the range of $5.65 to $5.75 including an estimated 5 to 10 cents positive impact from foreign exchange. The Zacks Consensus Estimate for the year’s adjusted earnings is $1.28.
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, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.