We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Hold on to Medtronic (MDT) Stock For Now
Read MoreHide Full Article
Medtronic plc (MDT - Free Report) has been gaining from robust market share gains across a large number of its businesses. The company ended the third quarter of fiscal 2022 with better-than-expected earnings. The strong growth across several emerging markets buoys optimism for the company. Yet, foreign exchange woes and other macroeconomic challenges raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has declined 13.3% against the 19.7% fall of the industry and 6.2% rise of the S&P 500.
The renowned medical-device company has a market capitalization of $139.28 billion. Its earnings surpassed estimates in the trailing four quarters delivering an average surprise of 3.9%.
The company’s projected long-term earnings growth of 7.6% compares with the industry’s growth projection of 15.9% and the S&P 500’s estimated 11.3% growth.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Medtronic’s fiscal third-quarter earnings were ahead of the Zacks Consensus Estimate. The company registered organic growth in the Cardiovascular, Neuroscience and Diabetes segments. From a geographic perspective, emerging markets were relatively stronger compared to U.S. and Non-U.S. development market revenues, growing 7% year over year, on strength in South Asia, Latin America and the Middle East, and Africa. The revenue guidance for the fourth quarter of fiscal 2022, indicating 4.37% year-over-year growth on a reported basis, instills investor optimism.
Market Share Gain Continues: We are encouraged by Medtronic’s recent market share gains across an increasing number of its businesses. In the fiscal third quarter, about 60% of the company’s businesses won a share. Within the Cardiovascular portfolio, in cardiac rhythm management, the company gained more than1.5 points of share. In Peripheral Vascular Health, the company won about a point of share with strong growth in its Abre deep venous stents and venous seal closure system. Meanwhile, in the Medical Surgical portfolio, Medtronic gained a share in GI, driven by momentum from the recently launched Emprint HP Generator and Beacon endoscopic ultrasound franchise.
Business Recovery Continues: Medtronic has exhibited strong recovery and ability to return to growth since the start of fiscal 2022, raising optimism. This recovery is just not driven by recovery from the pandemic but by the strong new product flow that Medtronic is bringing to the market over this period. Further, the increasing cadence of tuck-in M&As and implementation of the new operating model should add to the recovery momentum. The company expects to be back to pre-COVID levels in most of its markets before the end of the fourth quarter.
Downsides
Dull Sales Scenario: Medtronic’s third-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.
Exposure to Currency Movement: With Medtronic recording a significant portion of its sales from the international market, it is highly exposed to currency fluctuations. During the fiscal third-quarter earnings call, Medtronic noted that its fourth-quarter revenues would be negatively impacted by approximately $185 million from adverse currency translation.
Economic Uncertainty: Macroeconomic conditions in many developed countries have reduced healthcare budgets and increased pressure on utilization. This leads to fewer procedures, a trend that is expected to continue in the near future and affect revenue growth at Medtronic.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Medtronic’s earnings for 2022 has moved south by 2 cents to $5.67.
The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $32.04 billion, suggesting a 6.4% rise from the fiscal 2021 comparable figure.
Key Picks
A few better-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , McKesson Corporation (MCK - Free Report) and AmerisourceBergen Corporation .
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 25.5%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has outperformed the industry over the past year. HSIC has gained 26.5% compared with the industry’s 2.8% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. McKesson’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 52.7% against 2.7% industry growth in the said period.
AmerisourceBergen has a long-term earnings growth rate of 8.2%. In the trailing four quarters, AmerisourceBergen’s earnings surpassed estimates in three and missed in one, delivering an average surprise of 2.3%. The stock currently sports a Zacks Rank #2.
AmerisourceBergen has outperformed its industry in the past year, gaining 29.5% versus the industry’s 2.8% rise.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Here's Why You Should Hold on to Medtronic (MDT) Stock For Now
Medtronic plc (MDT - Free Report) has been gaining from robust market share gains across a large number of its businesses. The company ended the third quarter of fiscal 2022 with better-than-expected earnings. The strong growth across several emerging markets buoys optimism for the company. Yet, foreign exchange woes and other macroeconomic challenges raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has declined 13.3% against the 19.7% fall of the industry and 6.2% rise of the S&P 500.
The renowned medical-device company has a market capitalization of $139.28 billion. Its earnings surpassed estimates in the trailing four quarters delivering an average surprise of 3.9%.
The company’s projected long-term earnings growth of 7.6% compares with the industry’s growth projection of 15.9% and the S&P 500’s estimated 11.3% growth.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Q3 Upsides: Medtronic’s fiscal third-quarter earnings were ahead of the Zacks Consensus Estimate. The company registered organic growth in the Cardiovascular, Neuroscience and Diabetes segments. From a geographic perspective, emerging markets were relatively stronger compared to U.S. and Non-U.S. development market revenues, growing 7% year over year, on strength in South Asia, Latin America and the Middle East, and Africa. The revenue guidance for the fourth quarter of fiscal 2022, indicating 4.37% year-over-year growth on a reported basis, instills investor optimism.
Market Share Gain Continues: We are encouraged by Medtronic’s recent market share gains across an increasing number of its businesses. In the fiscal third quarter, about 60% of the company’s businesses won a share. Within the Cardiovascular portfolio, in cardiac rhythm management, the company gained more than1.5 points of share. In Peripheral Vascular Health, the company won about a point of share with strong growth in its Abre deep venous stents and venous seal closure system. Meanwhile, in the Medical Surgical portfolio, Medtronic gained a share in GI, driven by momentum from the recently launched Emprint HP Generator and Beacon endoscopic ultrasound franchise.
Business Recovery Continues: Medtronic has exhibited strong recovery and ability to return to growth since the start of fiscal 2022, raising optimism. This recovery is just not driven by recovery from the pandemic but by the strong new product flow that Medtronic is bringing to the market over this period. Further, the increasing cadence of tuck-in M&As and implementation of the new operating model should add to the recovery momentum. The company expects to be back to pre-COVID levels in most of its markets before the end of the fourth quarter.
Downsides
Dull Sales Scenario: Medtronic’s third-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.
Exposure to Currency Movement: With Medtronic recording a significant portion of its sales from the international market, it is highly exposed to currency fluctuations. During the fiscal third-quarter earnings call, Medtronic noted that its fourth-quarter revenues would be negatively impacted by approximately $185 million from adverse currency translation.
Economic Uncertainty: Macroeconomic conditions in many developed countries have reduced healthcare budgets and increased pressure on utilization. This leads to fewer procedures, a trend that is expected to continue in the near future and affect revenue growth at Medtronic.
Estimate Trend
Over the past 30 days, the Zacks Consensus Estimate for Medtronic’s earnings for 2022 has moved south by 2 cents to $5.67.
The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $32.04 billion, suggesting a 6.4% rise from the fiscal 2021 comparable figure.
Key Picks
A few better-ranked stocks in the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , McKesson Corporation (MCK - Free Report) and AmerisourceBergen Corporation .
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 25.5%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has outperformed the industry over the past year. HSIC has gained 26.5% compared with the industry’s 2.8% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. McKesson’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 52.7% against 2.7% industry growth in the said period.
AmerisourceBergen has a long-term earnings growth rate of 8.2%. In the trailing four quarters, AmerisourceBergen’s earnings surpassed estimates in three and missed in one, delivering an average surprise of 2.3%. The stock currently sports a Zacks Rank #2.
AmerisourceBergen has outperformed its industry in the past year, gaining 29.5% versus the industry’s 2.8% rise.