To meet the growing need for ventilators at the onset of the Coronavirus outbreak, Medtronic plc (MDT - Free Report) has planned to more than double its capacity to manufacture and supply ventilators. The decision came on the heels of the company recognizing heightening demand massively outstripping supply for this device in battling COVID-19 infections.
When all other major business segments of the company are facing recessionary hurdles during such uncertain times, Medtronic’s latest initiative seems strategic. This is anticipated to boost its Minimally Invasive Therapies Group revenues in the upcoming period.
While battling the pandemic, ventilators are needed to treat coronavirus-affected patients with severe respiratory illness. Per Medtronic, ventilator, while performing the functions of supplying oxygen and simulating the actions of breathing, allows the lungs of the patient to rest and recover.
Per the company, it has ventilators for a wide range of care settings within its respiratory care setting, including the acute segment (in-hospital patients in intensive care units, emergency departments or on the general care floors) and the sub-acute segment (out of hospital, long-term care facilities or home-ventilated patients).
The Ramp-Up Initiative
In Galway, Ireland, Medtronic manufactures its Puritan Bennett 980 (PB 980) and Puritan Bennett 840 (PB 840) ventilators. Both PB 980 and PB 840 ventilators are designed for critically ill patients in high acuity setting and are expected to be suitable for COVID-19 patients (with or without an underlying health issue).
At present, in this manufacturing facility, there are more than 250 employees dedicated to ventilator manufacturing and the company plans to more than double that number. Additional staff is currently being shifted from other Medtronic sites to support this ramp-up activity.
Considering the intensity of the current turbulence, the company is also prioritizing high risk/high need areas for ventilator allocation on a weekly basis for efficient global distribution through supply chains.
Share Price Performance
Meanwhile, shares of Medtronic underperformed the industry over the past three months. The stock has plunged 34.5%, wider than the industry’s 27.2% loss.
Zacks Rank and Key Picks
Medtronic currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the broader medical space include ResMed Inc. (RMD - Free Report) , Chemed Corporation (CHE - Free Report) and Hill-Rom Holdings, Inc. (HRC - Free Report) .
ResMed has an estimated long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2.
Chemed’s long-term earnings growth rate is estimated at 11.5%. The company presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hill-Rom’s long-term earnings growth rate is projected at 11.1%. It currently holds a Zacks Rank #2.
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