Medtronic Beats Earnings, Misses on Revenue For Q3
Medtronic, a global leader in medical technology, reported better-than-expected earnings but missed analysts’ revenue projections for the fiscal third quarter.
The Fridley, Minnesota-based medical company reported adjusted quarterly earnings of $1.37 per share, beating the Wall Street consensus estimates of $1.36 per share.
However, the company’s revenue declined 0.2% to $7.76 billion from a year earlier. That was below the market expectations of $7.88 billion. The company said that revenue results for the third quarter reflect unfavourable market conditions caused by COVID-19 and health system labour shortages, primarily in the U.S.
The company expects fourth-quarter organic revenue growth of nearly 5.5%, in line with current fourth-quarter organic revenue growth Street consensus. If recent foreign currency exchange rates hold, fourth-quarter revenue would be negatively affected by about $185 million.
The company expects fourth-quarter non-GAAP EPS in the range of $1.56 to $1.58, which includes a neutral to the slightly positive impact from foreign currency based on recent rates.
On Tuesday, Medtronic stock was trading 1.52% higher at $102.12. The stock fell nearly 3% so far this year after slumping over 11% in 2021.
Executive Comments
“Despite the challenges created by the pandemic, our teams executed and delivered adjusted EPS in line with our guidance and a penny ahead of consensus,” said Karen Parkhill, Medtronic’s chief financial officer said.
“We are starting to see procedure volumes improve, and our outlook assumes continued recovery through March and April. By the time we exit the fourth quarter, we expect procedure volumes in most of our markets to be back to pre-COVID levels.”
Analyst Comments
“Medtronic (MDT) reported F3Q revenue and EPS of $7.76B and $1.37 vs. Street estimates of $7.88Band $1.37. Organic sales growth was 2% vs. guidance of 3-4%, reflecting the negative impact of Omicron and staffing shortages on elective procedure volumes, primarily in the U.S.,” noted Joshua Jennings, equity analyst at Cowen.
“Medtronic (MDT) introduced F4Q targets for organic sales growth of 5.5% and EPS of $1.56-$1.58, both of which align with current sell-side forecasts.”
Medtronic Stock Price Forecast
Nineteen analysts who offered stock ratings for Medtronic in the last three months forecast the average price in 12 months of $127.44 with a high forecast of $155.00 and a low forecast of $105.00.
The average price target represents a 26.71% change from the last price of $100.58. Of those 19 analysts, 12 rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $120 with a high of $160 under a bull scenario and $83 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the medical device company’s stock.
“Our long-term bias remains positive, yet key pipeline product headwinds in CY21 push out top line contributions and WAMGR expansion, and act as a sentiment overhang. Into CY22, we view growth upside more limited, with prolonged COVID-19 pressure acting as an additional headwind. Pipeline execution, core momentum, and numbers moving higher will be the proof of structural change,” noted Cecilia Furlong, equity analyst at Morgan Stanley.
“While we’re positive on many ongoing shifting dynamics, including pipeline management improvement, increasing R&D, reinvestment, and strategic M&A, the path toward sustainable 5%+ top-line growth and the turnaround needed to make the company a structural outperformer is appearing increasingly prolonged.”
Several analysts have also updated their stock outlook. Raymond James lowered its target price to $116 from $127. Pepper Sandler cut its target price from $110 to $105 over the same period. The target price was lowered from $131 to $128 by Needham.
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This article was originally posted on FX Empire
