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What's in the Cards for Medtronic (MDT) in Q4 Earnings?

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Medtronic plc (MDT - Free Report) is scheduled to report fourth-quarter and fiscal 2022 results on May 26, 2022, before the opening bell.

In the last-reported quarter, the company’s earnings exceeded the Zacks Consensus Estimate by 0.74%. Medtronic surpassed estimates in each of the trailing four quarters, the average surprise being 3.88%.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Medtronic witnessed an adverse trend of procedure volume across its core business during January and February 2022, impacted by Omicron and other new strains of coronavirus. Per the company’s last update in February, it expected continued procedure volume recovery through March and April and is expected to be back to pre-COVID levels in most of its markets before the end of the fourth quarter. Based on these assumptions for the fourth quarter, the company projected organic revenue growth of approximately 5.5% for fiscal Q4.

However, we believe the rate of growth to be a bit tapered for Medtronic, thanks to the industry-wide trend of significant staffing shortages and supply disruption through a significant phase of fiscal Q4.

Medtronic PLC Price and EPS Surprise

Medtronic PLC Price and EPS Surprise

Medtronic PLC price-eps-surprise | Medtronic PLC Quote

Meanwhile, Cardiovascular revenues are expected to have gained share in both high and low power devices. Medtronic’s recently launched Micra AV leadless pacemaker in Japan and Micra VR in China are expected to have resulted in strong international Micra growth in Q4.In Peripheral Vascular Health, the company is expected to have recorded strong sales of its Abre deep venous stents and venous seal closure system. The company earlier expected the cardiovascular segment to report 7% to 8% growth in fiscal Q4.

In the neuroscience portfolio, the company is expected to have increased market share in Cranial and Spinal technologies. Demand for the company’s new spine implants is expected to have contributed to the growth. In Neuromodulation, over the past few months, Medtronic has been witnessing strong momentum from new products in both Pain Stim and Brain Modulation.

In Pain Stim, despite the COVID headwind, Medtronic is expected to have realized strong sales of its Intellis with DTM technology and Vanta recharge-free systems. In Brain Modulation, despite the ongoing headwinds from replacement devices, the company is expected to have gained from strong adoption of its Percept Neurostimulator with BrainSense technology, paired with SenSight directional lead.The company had earlier projected Neuroscience organic revenue growth of approximately 2.5% to 3.5% for fiscal Q4.

In Medical Surgical, Medtronic is expected to have gained share in gastrointestinal (GI), driven by momentum from the recently launched Emprint HP Generator and the Beacon endoscopic ultrasound franchise. In Respiratory Interventions, despite the year-over-year headwind as ventilator sales continue to return to pre-pandemic levels, the company is expected to have registered sales growth on the rising demand for premium ventilation with Puritan Bennett 980, in video laryngoscopes with McGRATH MAC, and in core airways with Taperguard endotracheal tubes. The company had earlier projected medical surgical organic revenue growth of approximately 7.5% to 8.5% for fiscal Q4.

In Diabetes, MDT might have gained from the continued execution of its turnaround strategy. However, at the same time, the company is expected to have lost share in the United States as it waited for new product approvals. The company, in August, noted that despite the current challenges in diabetes, it would return to growth in the near term, banking on its product pipeline and differentiated technologies. Meanwhile, CMS’ Medicare coverage expansion (announced in December 2021) to include CGMs that integrate with Medtronic insulin pumps is expected to have a partial-quarter contribution to this business revenues in the fourth quarter. Medtronic expected its Diabetes business to report a decline in the range of 6% to 7% on an organic basis.

Q4 Estimates

The Zacks Consensus Estimate for Medtronic’s fiscal fourth-quarter total revenues of $8.43 billion suggests a 2.9% rise from the prior-year reported number. The consensus mark for earnings of $1.57 per share implies a 4.7% increase from the year-ago reported figure.

What Our Quantitative Model Predicts

Per our proven model, a stock needs to have the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver an earnings surprise. But this is not the case here as you will see below.

Earnings ESP: Medtronic has an Earnings ESP of -0.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Medtronic currently carries a Zacks Rank #3.

Stocks Worth a Look

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. (OMCL - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Masimo Corporation (MASI - Free Report) .

Omnicell, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13.4%.

AMN Healthcare, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of $3.49, which beat the Zacks Consensus Estimate by 7.4%. Revenues of $1.55 billion outpaced the consensus mark by 3.7%.

AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.6%.

Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which surpassed the Zacks Consensus Estimate by 1.1%. Revenues of $304.2 million outpaced the Zacks Consensus Estimate by 3.6%. It currently carries a Zacks Rank #2.

Masimo has an earnings yield of 3.4% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.