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Medtronic (MDT) Cardiovascular Line Rebounds, Spine Stays Soft
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The increase in the adoption of Medtronic plc's (MDT - Free Report) globally-accepted advanced therapies is encouraging. However, unfavorable currency movement and global economic uncertainties continue to affect Medtronic. The stock currently carries a Zacks Rank #3 (Hold).
Over the past year, Medtronic has outperformed the industry. The stock has declined 8% compared with the industry’s 14.8% decline.
Medtronic’s second-quarter fiscal 2022 earnings were ahead of the Zacks Consensus Estimate. While the company faced the COVID-19 resurgence headwind in the United States, the performance of its international markets was robust. Medtronic delivered 6% revenue growth outside the United States, including mid-teens growth in emerging markets. Emerging market growth was up 9% from the pre-pandemic levels in the second quarter of fiscal 2020.
Despite a challenging market backdrop, the overall results reflected solid execution around new product launches and strong underlying bottom-line growth. In the quarter, the company registered organic growth in the Cardiovascular, Neuroscience and Diabetes segments. Within Cardiovascular, Cardiac Rhythm & Heart Failure (CRHF), Coronary & Peripheral Vascular (CPV) and Structural Heart & Aortic (SHA) each registered organic growth. In Medical Surgical, the Surgical Innovations (SI) business witnessed mid-single-digit growth in Advanced Surgical Instruments, driven by the continued adoption of the company's LigaSure, Sonicision, and Tri-Staple technologies.
Medtronic PLC Price
Hernia & Wound Management increased in high single digits, with strength in sutures. Further, excluding the impact of ventilator sales declines, RGR revenues increased 4% organically, banking on low double-digit growth in Patient Monitoring with mid-teens growth in the company's Nellcor pulse oximetry products, driven in part by increased monitoring of COVID hospitalized patients. Gastrointestinal revenues increased in mid-single digits, with low double-digit growth in Chronic & Colorectal on the strength of PillCam system sales. Renal Care Solutions increased in mid-single digits with low-40s growth in acute therapies driven by increased demand for adult and pediatric continuous renal replacement therapy.
Within Neuroscience, Specialty Therapies witnessed high-teens growth in Hemorrhagic Stroke products. Neuromodulation registered strong growth on mid-20s growth in Brain Modulation. Within Neurosurgery, the company registered sales growth in StealthStation navigation systems, O-arm imaging systems, and Midas Rex.
In Diabetes, durable insulin pumps grew in the low-20s, including high-teens growth in the United States and low-20s growth in international markets on the continued launch of the MiniMed 770G and MiniMed 780G systems, respectively. Sales of continuous glucose monitoring (CGM) products increased in low-single digits.
The quarter’s gross and operating margins showed improvements on a year-over-year basis.
Medtronic’s second-quarter fiscal 2022 revenues missed the Zacks Consensus Estimate. The sluggish top-line results reflected the unfavorable market impact of COVID-19 and health system staffing shortages on medical device procedure volumes, primarily in the United States. Specifically, procedure volumes were lighter than expected in markets, where the company’s products are used in the more deferrable procedures. For example, the company’s spine business was soft and procedures that require ICU bed capacity like TAVR were down in fiscal Q2.
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%, down from the prior expectation of approximately 9%.
While Medtronic expects the impact of the COVID resurgence to diminish, the effect of the ongoing pandemic on businesses in emerging markets remains challenging to predict. This is because, in regions like the United States, Europe and some parts of Asia, the virus is raging.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. AMN Healthcare surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #2 (Buy).
Henry Schein has gained 6.1% compared with the industry’s 1.7% rise over the past year.
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. Laboratory Corporation currently sports a Zacks Rank #1.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.
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Medtronic (MDT) Cardiovascular Line Rebounds, Spine Stays Soft
The increase in the adoption of Medtronic plc's (MDT - Free Report) globally-accepted advanced therapies is encouraging. However, unfavorable currency movement and global economic uncertainties continue to affect Medtronic. The stock currently carries a Zacks Rank #3 (Hold).
Over the past year, Medtronic has outperformed the industry. The stock has declined 8% compared with the industry’s 14.8% decline.
Medtronic’s second-quarter fiscal 2022 earnings were ahead of the Zacks Consensus Estimate. While the company faced the COVID-19 resurgence headwind in the United States, the performance of its international markets was robust. Medtronic delivered 6% revenue growth outside the United States, including mid-teens growth in emerging markets. Emerging market growth was up 9% from the pre-pandemic levels in the second quarter of fiscal 2020.
Despite a challenging market backdrop, the overall results reflected solid execution around new product launches and strong underlying bottom-line growth. In the quarter, the company registered organic growth in the Cardiovascular, Neuroscience and Diabetes segments. Within Cardiovascular, Cardiac Rhythm & Heart Failure (CRHF), Coronary & Peripheral Vascular (CPV) and Structural Heart & Aortic (SHA) each registered organic growth. In Medical Surgical, the Surgical Innovations (SI) business witnessed mid-single-digit growth in Advanced Surgical Instruments, driven by the continued adoption of the company's LigaSure, Sonicision, and Tri-Staple technologies.
Medtronic PLC Price
Hernia & Wound Management increased in high single digits, with strength in sutures. Further, excluding the impact of ventilator sales declines, RGR revenues increased 4% organically, banking on low double-digit growth in Patient Monitoring with mid-teens growth in the company's Nellcor pulse oximetry products, driven in part by increased monitoring of COVID hospitalized patients. Gastrointestinal revenues increased in mid-single digits, with low double-digit growth in Chronic & Colorectal on the strength of PillCam system sales. Renal Care Solutions increased in mid-single digits with low-40s growth in acute therapies driven by increased demand for adult and pediatric continuous renal replacement therapy.
Within Neuroscience, Specialty Therapies witnessed high-teens growth in Hemorrhagic Stroke products. Neuromodulation registered strong growth on mid-20s growth in Brain Modulation. Within Neurosurgery, the company registered sales growth in StealthStation navigation systems, O-arm imaging systems, and Midas Rex.
In Diabetes, durable insulin pumps grew in the low-20s, including high-teens growth in the United States and low-20s growth in international markets on the continued launch of the MiniMed 770G and MiniMed 780G systems, respectively. Sales of continuous glucose monitoring (CGM) products increased in low-single digits.
The quarter’s gross and operating margins showed improvements on a year-over-year basis.
Medtronic’s second-quarter fiscal 2022 revenues missed the Zacks Consensus Estimate. The sluggish top-line results reflected the unfavorable market impact of COVID-19 and health system staffing shortages on medical device procedure volumes, primarily in the United States. Specifically, procedure volumes were lighter than expected in markets, where the company’s products are used in the more deferrable procedures. For example, the company’s spine business was soft and procedures that require ICU bed capacity like TAVR were down in fiscal Q2.
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%, down from the prior expectation of approximately 9%.
While Medtronic expects the impact of the COVID resurgence to diminish, the effect of the ongoing pandemic on businesses in emerging markets remains challenging to predict. This is because, in regions like the United States, Europe and some parts of Asia, the virus is raging.
Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Laboratory Corporation of America Holdings (LH - Free Report) .
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. AMN Healthcare surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 23.8% versus the 62% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 21.86%. It currently carries a Zacks Rank #2 (Buy).
Henry Schein has gained 6.1% compared with the industry’s 1.7% rise over the past year.
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. Laboratory Corporation currently sports a Zacks Rank #1.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.