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Will Medtronic's (MDT) Emergent Procedures Drive Q1 Earnings?
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Medtronic plc (MDT - Free Report) is scheduled to report first-quarter fiscal 2021 results on Aug 25, before the opening bell.
In the last-reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.69%. However, the bottom line outpaced estimates in the remaining three quarters, with the four-quarter average surprise being 2.95%.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
Medtronic, which has a strong global base, is expected to have witnessed a notable reduction in product demand across its core business segments (due to the massive disruption in the global supply chain and postponement of elective and non-COVID 19 healthcare activities). This might have hurt its revenues.
Earlier, the company had noted a more severe pandemic-led impact on its fiscal first-quarter procedural volume compared to the fourth quarter. The assumption was based on a full-quarter impact of the crisis on the company’s elective procedures in the first quarter versus the last-reported quarter’s five to six weeks of pandemic blow.
However, in a slight relief for investors, the company at the Goldman Sachs 41st Annual Global Healthcare Conference in June, noted chances of procedural recovery through the first quarter. More particularly, the company noted that while some segments were performing more-or-less in line with its anticipation, segments like cardiovascular, parts of neuroscience businesses including spine outpaced Medtronic’s projection for the first quarter.
In other words, segments involving emergent procedures have been gaining traction fast compared to the more deferrable procedures. There has been faster recovery in the cardiac rhythm business with a lot of new ICD launches. Also, the spine business has gained momentum through the first quarter, banking on growing demand for the company’s robotics surgeries amid the coronavirus situation.
We are particularly upbeat about certain lines of products, which are treated under more urgent category and might have borne a relatively lesser impact of the pandemic. Among these, the company is particularly hopeful about its Extracorporeal Life Support products, including ECMO machines and disposables, within its Cardiac Surgery business of CVG (Cardiac and Vascular Group); Ventilators, pulse oximetry, capnography, and advanced parameter monitoring products within its Respiratory and Patient Monitoring business of MITG (Minimally Invasive Therapies Group), and Supplies and consumables within Diabetes Group.
The company is expected to have registered stronger-than-usual demand for its ventilator products. In this regard, the company also collaborated with technology partners and governments to drive new ventilator innovation and production to support COVID-19 patients worldwide. This might have contributed to the company’s first-quarter CVG revenues.
However, these product lines represented just 10% of Medtronic’s pre-COVID-19 global revenues. Further, ventilators and diabetes supplies both generally carry a lower profit margin. This is again a concern as chances of an increase in sales of these products during the first quarter, minimizing the loss of sales in this period, is low.
Q1 Estimates
The Zacks Consensus Estimate for fiscal first-quarter total revenues of $5.38 billion suggests decline of 28.3% from the prior-year reported number. The consensus mark for earnings of 26 cents per share implies 79.4% decline from the year-ago reported figure.
What Our Quantitative Model Predicts
Per our proven model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver an earnings surprise. But this is not the case here as you will see below.
Earnings ESP: Medtronic has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Medtronic carries a Zacks Rank #3 (Buy).
Stocks Worth a Look
Here are a few stocks worth considering with the right mix of elements to surpass expectations this earnings season.
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +0.24% and a Zacks Rank of 2.
BJs Wholesale Club Holdings Inc. (BJ - Free Report) has an Earnings ESP of +12.87% and a Zacks Rank of 1.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Will Medtronic's (MDT) Emergent Procedures Drive Q1 Earnings?
Medtronic plc (MDT - Free Report) is scheduled to report first-quarter fiscal 2021 results on Aug 25, before the opening bell.
In the last-reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.69%. However, the bottom line outpaced estimates in the remaining three quarters, with the four-quarter average surprise being 2.95%.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
Medtronic, which has a strong global base, is expected to have witnessed a notable reduction in product demand across its core business segments (due to the massive disruption in the global supply chain and postponement of elective and non-COVID 19 healthcare activities). This might have hurt its revenues.
Earlier, the company had noted a more severe pandemic-led impact on its fiscal first-quarter procedural volume compared to the fourth quarter. The assumption was based on a full-quarter impact of the crisis on the company’s elective procedures in the first quarter versus the last-reported quarter’s five to six weeks of pandemic blow.
Medtronic PLC Price and EPS Surprise
Medtronic PLC price-eps-surprise | Medtronic PLC Quote
However, in a slight relief for investors, the company at the Goldman Sachs 41st Annual Global Healthcare Conference in June, noted chances of procedural recovery through the first quarter. More particularly, the company noted that while some segments were performing more-or-less in line with its anticipation, segments like cardiovascular, parts of neuroscience businesses including spine outpaced Medtronic’s projection for the first quarter.
In other words, segments involving emergent procedures have been gaining traction fast compared to the more deferrable procedures. There has been faster recovery in the cardiac rhythm business with a lot of new ICD launches. Also, the spine business has gained momentum through the first quarter, banking on growing demand for the company’s robotics surgeries amid the coronavirus situation.
We are particularly upbeat about certain lines of products, which are treated under more urgent category and might have borne a relatively lesser impact of the pandemic. Among these, the company is particularly hopeful about its Extracorporeal Life Support products, including ECMO machines and disposables, within its Cardiac Surgery business of CVG (Cardiac and Vascular Group); Ventilators, pulse oximetry, capnography, and advanced parameter monitoring products within its Respiratory and Patient Monitoring business of MITG (Minimally Invasive Therapies Group), and Supplies and consumables within Diabetes Group.
The company is expected to have registered stronger-than-usual demand for its ventilator products. In this regard, the company also collaborated with technology partners and governments to drive new ventilator innovation and production to support COVID-19 patients worldwide. This might have contributed to the company’s first-quarter CVG revenues.
However, these product lines represented just 10% of Medtronic’s pre-COVID-19 global revenues. Further, ventilators and diabetes supplies both generally carry a lower profit margin. This is again a concern as chances of an increase in sales of these products during the first quarter, minimizing the loss of sales in this period, is low.
Q1 Estimates
The Zacks Consensus Estimate for fiscal first-quarter total revenues of $5.38 billion suggests decline of 28.3% from the prior-year reported number. The consensus mark for earnings of 26 cents per share implies 79.4% decline from the year-ago reported figure.
What Our Quantitative Model Predicts
Per our proven model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver an earnings surprise. But this is not the case here as you will see below.
Earnings ESP: Medtronic has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Medtronic carries a Zacks Rank #3 (Buy).
Stocks Worth a Look
Here are a few stocks worth considering with the right mix of elements to surpass expectations this earnings season.
Autodesk, Inc. (ADSK - Free Report) has an Earnings ESP of +4.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +0.24% and a Zacks Rank of 2.
BJs Wholesale Club Holdings Inc. (BJ - Free Report) has an Earnings ESP of +12.87% and a Zacks Rank of 1.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>