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Medtronic (MDT) & Mazor Robotics Tie-Up Reaches Next Level

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Medtronic plc (MDT - Free Report) and Mazor Robotics Ltd recently announced an amendment to their existing partnership,which was initially signed in May 2016 to distribute a range of Mazor products. Per the modification, the companies have entered the next phase of the agreement earlier than expected.

Mazor Robotics is an Israel-based medical device company in the field of robotic surgical guidance systems.Meanwhile, Medtronic will assume the rights to exclusive worldwide distribution of the Mazor X system (Mazor Robotic’s spine surgery system) and will make $40-million third tranche investment in Mazor Robotics.

The early payment came on the back of the achievement of certain pre-agreed sales and marketing targets in advance. The growing demand for the Mazor X system also acted in favor.

Following the third installment, Medtronic‘s total investment in Mazor Robotics will rise to $71.9 million.  The partnership will help the companies get a platform to explore the development of products for the spine market.

Medtronic is making consistent efforts to expand its spine business under the Restorative Therapies Group (RTG). In the last reported first quarter of fiscal 2018, RTG reported a 2% year-over-year revenue increase at constant exchange rate, while the Spine business witnessed  low single-digit growth. Also, within RTG, the company has announced plans to launch the Solera Voyager 5.5/6.0 fixation system.

According to a report by Mordor Intelligence, the global market for Spinal Surgery Devices is estimated to reach a worth of $16.6 billion by 2021 at a CAGR of 5% from 2016 to 2021. Taking the bountiful opportunities in this niche space into consideration, we believe the company’s latest development is strategic.

Over the last three months, Medtronic has underperformed the broader industry. As per the last share price movement, the stock lost 6.9%, as compared to the 0.3% gain of the broader industry over this period. 

 Zacks Rank & Key Picks

Medtronic carries a Zacks Rank #4 (Sell). A few better-ranked medical stocks are Edwards Lifesciences Corporation (EW - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2 (Buy). You cansee the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 25.9% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 25.8% over the last six months.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 5.4% over the last six months.

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