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Medtronic (MDT) Down 2.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 2.2% 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 Q3 Earnings, Revenues Top Estimates, View Up
Medtronic reported adjusted earnings per share of $1.30 in third-quarter fiscal 2024, in line with the year-ago quarter’s earnings per share. The figure beat the Zacks Consensus Estimate by 3.2%.
Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP earnings per share were 99 cents, up 7.6% from the year-ago quarter’s reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $8.09 billion, up 4.7% year over year on a reported basis and 4.6% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 1.7%.
The company's organic revenue results reflect continued momentum across the company, driven by strong growth in Diabetes, Core Spine, Cardiac Surgery, Structural Heart and Cardiac Pacing, as well as strength in international markets.
Segment Details
The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.
In the fiscal third quarter, Cardiovascular revenues increased 6.1% at CER to $2.92 billion, with all three divisions reporting organic growth this quarter.
Cardiac Rhythm & Heart Failure sales totaled $1.47 billion, up 3.6% year over year at CER. Revenues from Structural Heart & Aortic were up 10.9% at CER to $843 million. Coronary & Peripheral Vascular revenues were up 6% year over year to $616 million.
In Medical Surgical, worldwide sales totaled $2.15 billion, up 3.9% year over year at CER. The Surgical & Endoscopy revenue grew 4.5%, while Patient Monitoring & Respiratory Interventions revenues rose 1.9%.
In Neuroscience, worldwide revenues of $2.36 billion were up 4.8% year over year and 4.3% organic, with a mid-single digit organic increase in CST, low-single-digit organic increases in Specialty Therapies and flat organic results in Neuromodulation.
Revenues in the Diabetes group rose 12.3% at CER and 10.2% on organic to $640 million. The company registered mid-single-digit growth in the U.S. market, driven by the continued launch of the MiniMed 780G system. Non-U.S. Developed markets grew low-double digits on continued MiniMed 780G system adoption and increased CGM attachment rates.
Margins
Gross margin in the reported quarter expanded 41 basis points (bps) to 65.6% on a 3.5% rise in the cost of revenues.
Research and development expenses rose 1.0% year over year at $695 million. Selling, general and administrative expenses rose 2.2% to $2.67 billion.
Adjusted operating margin expanded 151 bps year over year to 23.9%.
Guidance
Medtronic raised fiscal 2024 guidance.
For fiscal 2024, organic revenue growth is expected to be 4.75-5% (up from the earlier guidance of 4.75%). The organic revenue growth guidance excludes the impact of foreign currency and revenues 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 2.9 -3.3%.
The Zacks Consensus Estimate for the company’s fiscal 2024 worldwide revenues is pegged at $32.07 billion.
The full-year adjusted earnings per share is projected in the range of $5.19-$5.21 (previous guidance was $5.13- $5.19). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.16.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Medtronic has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 has been net zero. Notably, Medtronic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Medtronic is part of the Zacks Medical - Products industry. Over the past month, Prestige Consumer Healthcare (PBH - Free Report) , a stock from the same industry, has gained 5.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
PRESTIGE CONSMR reported revenues of $282.74 million in the last reported quarter, representing a year-over-year change of +2.6%. EPS of $1.06 for the same period compares with $1.04 a year ago.
PRESTIGE CONSMR is expected to post earnings of $1.14 per share for the current quarter, representing a year-over-year change of +6.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for PRESTIGE CONSMR. Also, the stock has a VGM Score of B.
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Medtronic (MDT) Down 2.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 2.2% 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 Q3 Earnings, Revenues Top Estimates, View Up
Medtronic reported adjusted earnings per share of $1.30 in third-quarter fiscal 2024, in line with the year-ago quarter’s earnings per share. The figure beat the Zacks Consensus Estimate by 3.2%.
Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP earnings per share were 99 cents, up 7.6% from the year-ago quarter’s reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $8.09 billion, up 4.7% year over year on a reported basis and 4.6% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 1.7%.
The company's organic revenue results reflect continued momentum across the company, driven by strong growth in Diabetes, Core Spine, Cardiac Surgery, Structural Heart and Cardiac Pacing, as well as strength in international markets.
Segment Details
The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.
In the fiscal third quarter, Cardiovascular revenues increased 6.1% at CER to $2.92 billion, with all three divisions reporting organic growth this quarter.
Cardiac Rhythm & Heart Failure sales totaled $1.47 billion, up 3.6% year over year at CER. Revenues from Structural Heart & Aortic were up 10.9% at CER to $843 million. Coronary & Peripheral Vascular revenues were up 6% year over year to $616 million.
In Medical Surgical, worldwide sales totaled $2.15 billion, up 3.9% year over year at CER. The Surgical & Endoscopy revenue grew 4.5%, while Patient Monitoring & Respiratory Interventions revenues rose 1.9%.
In Neuroscience, worldwide revenues of $2.36 billion were up 4.8% year over year and 4.3% organic, with a mid-single digit organic increase in CST, low-single-digit organic increases in Specialty Therapies and flat organic results in Neuromodulation.
Revenues in the Diabetes group rose 12.3% at CER and 10.2% on organic to $640 million. The company registered mid-single-digit growth in the U.S. market, driven by the continued launch of the MiniMed 780G system. Non-U.S. Developed markets grew low-double digits on continued MiniMed 780G system adoption and increased CGM attachment rates.
Margins
Gross margin in the reported quarter expanded 41 basis points (bps) to 65.6% on a 3.5% rise in the cost of revenues.
Research and development expenses rose 1.0% year over year at $695 million. Selling, general and administrative expenses rose 2.2% to $2.67 billion.
Adjusted operating margin expanded 151 bps year over year to 23.9%.
Guidance
Medtronic raised fiscal 2024 guidance.
For fiscal 2024, organic revenue growth is expected to be 4.75-5% (up from the earlier guidance of 4.75%). The organic revenue growth guidance excludes the impact of foreign currency and revenues 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 2.9 -3.3%.
The Zacks Consensus Estimate for the company’s fiscal 2024 worldwide revenues is pegged at $32.07 billion.
The full-year adjusted earnings per share is projected in the range of $5.19-$5.21 (previous guidance was $5.13- $5.19). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.16.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Medtronic has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 has been net zero. Notably, Medtronic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Medtronic is part of the Zacks Medical - Products industry. Over the past month, Prestige Consumer Healthcare (PBH - Free Report) , a stock from the same industry, has gained 5.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
PRESTIGE CONSMR reported revenues of $282.74 million in the last reported quarter, representing a year-over-year change of +2.6%. EPS of $1.06 for the same period compares with $1.04 a year ago.
PRESTIGE CONSMR is expected to post earnings of $1.14 per share for the current quarter, representing a year-over-year change of +6.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for PRESTIGE CONSMR. Also, the stock has a VGM Score of B.