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Medtronic (MDT) Q2 Earnings Beat Estimates, 2024 View Up
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Medtronic plc (MDT - Free Report) reported adjusted earnings per share (EPS) of $1.25 in second-quarter fiscal 2024 compared with the year-ago quarter’s EPS of $1.30. The figure moved down 4% but beat the Zacks Consensus Estimate by 5.9%.
Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP EPS was 68 cents, surging 112.5% from the year-ago quarter’s reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.98 billion, up 5.3% year over year on a reported basis and 5% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 0.9%.
The company's organic revenue results reflect broad strength across businesses and geographies, benefiting from durable fundamentals.
Segment Details
The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.
In the fiscal second quarter, Cardiovascular revenues increased 5.9% at CER to $2.92 billion, with all three divisions reporting organic growth this quarter. This compares with our model projection of $2.87 billion for the fiscal second quarter.
Cardiac Rhythm & Heart Failure sales totaled $1.49 billion, up 5.3% year over year at CER. Revenues from Structural Heart & Aortic were up 8.2% at CER to $819 million. Coronary & Peripheral Vascular revenues were up 5% year over year to $613 million.
In Medical Surgical, worldwide sales totaled $2.14 billion, up 7% year over year at CER. The Surgical & Endoscopy revenue grew 8.5%, while Patient Monitoring & Respiratory Interventions revenues rose 2.5%. This compares with our model projection of $2.18 billion for the Surgical segment for Q2.
In Neuroscience, worldwide revenues of $2.29 billion were up 4.7% year over year and 4.2% organic, with a high-single-digit organic increase in CST and low-single-digit organic increases in Specialty Therapies and Neuromodulation. This compares with our model projection of $2.23 billion for the Neuroscience segment for the said quarter.
Revenues in the Diabetes group rose 9.7% at CER and 6.7% on organic to $610 million. The company registered mid-teens growth in non-U.S. developed markets on continued MiniMed 780G system adoption and increased CGM attachment rates on the strength of the Guardian 4 sensor. This compares with our model projection of $560.2 million for the fiscal second quarter for the Diabetes segment.
Margins
Gross margin in the reported quarter contracted 116 basis points (bps) to 65.4% on an 8.9% rise in cost of revenues.
Research and development expenses rose 3.3% year over year at $698 million. Selling, general and administrative expenses rose 2.6% to $2.69 billion.
Adjusted operating margin contracted 13 bps year over year to 23%.
Guidance
Medtronic raised fiscal 2024 guidance.
Fiscal 2024 organic revenue growth is expected to be 4.75% (up from the earlier guidance of 4.5%). The organic revenue growth guidance excludes the impact of foreign currency and revenue related to certain businesses reported as Other. If foreign currency exchange rates as of the beginning of November hold, fiscal 2024 revenue growth on a reported basis would be approximately 2.6%.
The Zacks Consensus Estimate for the company’s fiscal 2024 worldwide revenues is pegged at $32.13 billion.
The full-year adjusted EPS is now expected in the range of $5.13-$5.19 (previous guidance was $5.08- $5.16). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.12.
Our Take
Medtronic recorded earnings and revenue beat in the fiscal second quarter. The company's organic revenue results reflect broad strength across businesses and geographies, benefiting from durable fundamentals. During the quarter, the company received the FDA approval for the Aurora EV-ICD system and Symplicity Spyral renal denervation (RDN) system. Within Neuroscience, CST delivered high-single-digit Core Spine growth on implant pull-through fueled by continued adoption of the AiBLE ecosystem. Within Diabetes, non-U.S. developed markets rose in the mid-teens on continued MiniMed 780G system adoption and increased CGM attachment rates on the strength of the Guardian 4 sensor. The raised fiscal 2024 guidance looks encouraging.
However, macroeconomic headwinds related to persistent inflation and unfavorable foreign currency movements continue to challenge the company’s earnings performance.
Zacks Rank & Other Key Picks
Medtronic currently carries a Zacks Rank #3 (Hold).
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HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
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PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
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Medtronic (MDT) Q2 Earnings Beat Estimates, 2024 View Up
Medtronic plc (MDT - Free Report) reported adjusted earnings per share (EPS) of $1.25 in second-quarter fiscal 2024 compared with the year-ago quarter’s EPS of $1.30. The figure moved down 4% but beat the Zacks Consensus Estimate by 5.9%.
Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP EPS was 68 cents, surging 112.5% from the year-ago quarter’s reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.98 billion, up 5.3% year over year on a reported basis and 5% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 0.9%.
The company's organic revenue results reflect broad strength across businesses and geographies, benefiting from durable fundamentals.
Segment Details
The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.
In the fiscal second quarter, Cardiovascular revenues increased 5.9% at CER to $2.92 billion, with all three divisions reporting organic growth this quarter. This compares with our model projection of $2.87 billion for the fiscal second quarter.
Cardiac Rhythm & Heart Failure sales totaled $1.49 billion, up 5.3% year over year at CER. Revenues from Structural Heart & Aortic were up 8.2% at CER to $819 million. Coronary & Peripheral Vascular revenues were up 5% year over year to $613 million.
In Medical Surgical, worldwide sales totaled $2.14 billion, up 7% year over year at CER. The Surgical & Endoscopy revenue grew 8.5%, while Patient Monitoring & Respiratory Interventions revenues rose 2.5%. This compares with our model projection of $2.18 billion for the Surgical segment for Q2.
Medtronic PLC Price, Consensus and EPS Surprise
Medtronic PLC price-consensus-eps-surprise-chart | Medtronic PLC Quote
In Neuroscience, worldwide revenues of $2.29 billion were up 4.7% year over year and 4.2% organic, with a high-single-digit organic increase in CST and low-single-digit organic increases in Specialty Therapies and Neuromodulation. This compares with our model projection of $2.23 billion for the Neuroscience segment for the said quarter.
Revenues in the Diabetes group rose 9.7% at CER and 6.7% on organic to $610 million. The company registered mid-teens growth in non-U.S. developed markets on continued MiniMed 780G system adoption and increased CGM attachment rates on the strength of the Guardian 4 sensor. This compares with our model projection of $560.2 million for the fiscal second quarter for the Diabetes segment.
Margins
Gross margin in the reported quarter contracted 116 basis points (bps) to 65.4% on an 8.9% rise in cost of revenues.
Research and development expenses rose 3.3% year over year at $698 million. Selling, general and administrative expenses rose 2.6% to $2.69 billion.
Adjusted operating margin contracted 13 bps year over year to 23%.
Guidance
Medtronic raised fiscal 2024 guidance.
Fiscal 2024 organic revenue growth is expected to be 4.75% (up from the earlier guidance of 4.5%). The organic revenue growth guidance excludes the impact of foreign currency and revenue related to certain businesses reported as Other. If foreign currency exchange rates as of the beginning of November hold, fiscal 2024 revenue growth on a reported basis would be approximately 2.6%.
The Zacks Consensus Estimate for the company’s fiscal 2024 worldwide revenues is pegged at $32.13 billion.
The full-year adjusted EPS is now expected in the range of $5.13-$5.19 (previous guidance was $5.08- $5.16). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.12.
Our Take
Medtronic recorded earnings and revenue beat in the fiscal second quarter. The company's organic revenue results reflect broad strength across businesses and geographies, benefiting from durable fundamentals. During the quarter, the company received the FDA approval for the Aurora EV-ICD system and Symplicity Spyral renal denervation (RDN) system. Within Neuroscience, CST delivered high-single-digit Core Spine growth on implant pull-through fueled by continued adoption of the AiBLE ecosystem. Within Diabetes, non-U.S. developed markets rose in the mid-teens on continued MiniMed 780G system adoption and increased CGM attachment rates on the strength of the Guardian 4 sensor. The raised fiscal 2024 guidance looks encouraging.
However, macroeconomic headwinds related to persistent inflation and unfavorable foreign currency movements continue to challenge the company’s earnings performance.
Zacks Rank & Other Key Picks
Medtronic currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced their quarterly results are Haemonetics (HAE - Free Report) , Insulet (PODD - Free Report) and DexCom (DXCM - Free Report) . While Haemonetics and DexCom each carry a Zacks Rank #2 (Buy), Insulet sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 11.6% in the past year. Earnings estimates for Haemonetics have increased from $3.82 to $3.86 in 2023 and $4.07 to $4.11 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for Insulet’s 2023 earnings per share have increased from $1.61 to $1.90 in the past 30 days. Shares of the company have decreased 40.9% in the past year compared with the industry’s decline of 7%.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.23 to $1.41 in the past 30 days. Shares of the company have fallen 7.8% in the past year compared with the industry’s decline of 7.1%.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.