Medtronic plc (MDT Quick QuoteMDT - Free Report) reported adjusted earnings per share (EPS) of $1.30 in third-quarter fiscal 2024, in line with the year-ago quarter’s EPS. The figure beat the Zacks Consensus Estimate by 3.2%.

Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP EPS were 99 cents, up 7.6% from the year-ago quarter’s reported figure.

Total Revenues

Worldwide revenues in the reported quarter grossed $8.09 billion, up 4.7% year over year on a reported basis and 4.6% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 1.7%.

The company's organic revenue results reflect continued momentum across the company, driven by strong growth in Diabetes, Core Spine, Cardiac Surgery, Structural Heart and Cardiac Pacing, as well as strength in international markets.

Segment Details

The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.

In the fiscal third quarter, Cardiovascular revenues increased 6.1% at CER to $2.92 billion, with all three divisions reporting organic growth this quarter.

Cardiac Rhythm & Heart Failure sales totaled $1.47 billion, up 3.6% year over year at CER. Revenues from Structural Heart & Aortic were up 10.9% at CER to $843 million. Coronary & Peripheral Vascular revenues were up 6% year over year to $616 million.

In Medical Surgical, worldwide sales totaled $2.15 billion, up 3.9% year over year at CER. The Surgical & Endoscopy revenue grew 4.5%, while Patient Monitoring & Respiratory Interventions revenues rose 1.9%.

In Neuroscience, worldwide revenues of $2.36 billion were up 4.8% year over year and 4.3% organic, with a mid-single digit organic increase in CST, low-single-digit organic increases in Specialty Therapies and flat organic results in Neuromodulation.

Medtronic PLC Price, Consensus and EPS Surprise

Medtronic PLC price-consensus-eps-surprise-chart | Medtronic PLC Quote

Revenues in the Diabetes group rose 12.3% at CER and 10.2% on organic to $640 million. The company registered mid-single-digit growth in the U.S. market, driven by the continued launch of the MiniMed 780G system. Non-U.S. Developed markets grew low-double digits on continued MiniMed 780G system adoption and increased CGM attachment rates.

Margins

Gross margin in the reported quarter expanded 41 basis points (bps) to 65.6% on a 3.5% rise in the cost of revenues.

Research and development expenses rose 1.0% year over year at $695 million. Selling, general and administrative expenses rose 2.2% to $2.67 billion.

Adjusted operating margin expanded 151 bps year over year to 23.9%.

Guidance

Medtronic raised fiscal 2024 guidance.

For fiscal 2024, organic revenue growth is expected to be 4.75-5% (up from the earlier guidance of 4.75%). The organic revenue growth guidance excludes the impact of foreign currency and revenues related to certain businesses reported as Other. If foreign currency exchange rates as of the beginning of November hold, fiscal 2024 revenue growth on a reported basis would be approximately 2.9 -3.3%.

The Zacks Consensus Estimate for the company’s fiscal 2024 worldwide revenues is pegged at $32.07 billion.

The full-year adjusted EPS is projected in the range of $5.19-$5.21 (previous guidance was $5.13- $5.19). The Zacks Consensus Estimate for the year’s adjusted earnings is $5.16.

Our Take

Medtronic recorded earnings and revenue beat in the fiscal third quarter. The company's organic revenue results reflect broad strength across businesses and geographies, benefiting from durable fundamentals. During the quarter, the company received the FDA approval for the PulseSelect pulsed field ablation (PFA) system and Percept RC neurostimulator with BrainSense technology and CE Mark for MiniMed 780G System with Simplera Sync CGM and Micra AV2 and Micra VR2 leadless pacemakers.

Within Diabetes, non-U.S. developed markets rose in the low-double digits on continued MiniMed 780G system adoption and increased CGM attachment rates. The raised fiscal 2024 guidance looks encouraging.

However, macroeconomic headwinds related to persistent inflation and unfavorable foreign currency movements continue to challenge the company’s earnings performance.

Zacks Rank & Other Key Picks

Medtronic currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK Quick QuoteSYK - Free Report) , Cencora, Inc. (COR Quick QuoteCOR - Free Report) and Cardinal Health (CAH Quick QuoteCAH - Free Report) .

Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.

Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.

COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.

Cardinal Health, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.

CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6