Medtronic (MDT) Sees Trend Rebound Amid Coronavirus Crisis
On Aug 28, we issued an updated research report on Medtronic plc MDT. Increased adoption of the company's globally-accepted advanced therapies is encouraging. The stock currently carries a Zacks Rank #3 (Hold).
While Medtronic’s first-quarter fiscal 2021 earnings and revenues were ahead of the respective Zacks Consensus Estimate, the company registered significant year-over-year decline in these figures. Barring Respiratory, Gastrointestinal, & Renal, all business segments and geographies performed dismally.
Amid the pandemic, Medtronic’s business has been affected by three main factors. The first is the mix of urgent procedures versus those that are more deferrable. Almost all of Medtronic’s businesses have been affected by the decline in procedure volumes. Medtronic’s businesses that had a larger mix of products using urgent procedures saw an impact. However, the company noted that in the first quarter, procedural volume started to rebound.
Medtronic PLC Price
Medtronic PLC price | Medtronic PLC Quote
The second factor that hampered growth was the absence of bulk purchases due to depressed demand related to the pandemic. The third factor was capital equipment. While capital equipment represents a small amount of Medtronic’s overall revenues, there are certain businesses that have a higher mix and felt the impact of hospitals and surgery centers delaying their capital evaluation and purchases.
Although revenues and earnings were down year over year in the first quarter of fiscal 2021, there was faster-than-expected recovery. Procedure volumes recovered in the quarter in multiple markets globally. Also, the company witnessed market share gains in a number of large businesses. Per Medtronic, May was better than April and June was better than May. This improvement continued in July and August as well.
If this trend continues, Medtronic expects its fiscal second-quarter 2021 organic growth rate to improve at a rate similar to what it experienced between the fiscal fourth-quarter 2020 and the fiscal first-quarter 2021. Notably, organic sales dipped 25% and 17% in the fiscal-fourth quarter and fiscal-first quarter respectively. From there, the company expects sequential improvement in the third and fourth quarters of fiscal 2021.
Over the past year, shares of Medtronic have outperformed the industry. The stock has rallied 6.1% compared with the industry's 2.9% rise.
Key Picks
Some better-ranked stocks from the broader medical space are QIAGEN N.V. QGEN, Thermo Fisher Scientific Inc. TMO and Hologic, Inc. HOLX.
QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently sports a Zacks Rank #1. (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 15%. It currently carries a Zacks Rank #2 (Buy).
Hologic’s long-term earnings growth rate is estimated at 15.5%. The company presently sports a Zacks Rank #1.
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Medtronic PLC (MDT) : Free Stock Analysis Report
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