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Reasons to Retain Medtronic Stock in Your Portfolio Now
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Medtronic plc’s (MDT - Free Report) growth is backed by remarkable progress within the Neurosurgery Portfolio. The company’s continuous efforts to capture several growth markets look impressive. Meanwhile, headwinds from adverse foreign exchange effects pose a challenge to Medtronic’s operations. Mounting costs and expenses due to geopolitical conditions also add to the worry.
In the past year, this Zacks Rank #3 (Hold) stock has risen 15.6% compared with the industry’s 24.2% growth. The S&P 500 composite has witnessed a 33.7 % increase in the same time frame.
The renowned medical device company has a market capitalization of $115.47 billion. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 3.07%.
Let’s delve deeper.
Medtronic’s Key Upsides
Strategic Focus to Capture Several Growth Markets: Medtronic has categorized its businesses based on three major growth markets — Established market leaders, Synergistic and Highest Growth. In order to capture shares within these markets, the company is focusing on several initiatives, including new product launches, enhanced application of AI across the portfolio and maintaining pricing while maximizing efficiencies in the operating overhead. Currently, Medtronic is initiating many new product cycles, in markets like diabetes, pulse field ablation, TAVR, neuromodulation, hypertension and robotics.
During the fiscal first quarter, the company’s Highest Growth businesses jointly grew 8%, which comprised 21% of the company’s consolidated revenues. Established market leaders businesses made up just under half of the total revenues and grew 5% year over year. Within Synergistic businesses, neuromodulation was the primary growth driver in the fiscal first quarter, growing 10%, well above the market.
Neurosurgery Portfolio Shows Strong Growth Prospects:Within the Neuroscience portfolio, the Cranial, Spinal technologies business has been registering strong growth in recent quarters. The continued adoption of the AiBLE ecosystem led to strong mid-single digits growth within the Cranial, Spinal technologies. The company's ENT business within the Specialty Therapies division in the Neuroscience portfolio continues to contribute positively, banking on the continued adoption of Propel and Sinuva that came from the Inceptiv acquisition.
In Neuromodulation, the company is gaining new implant share in both pain Stim and DBS (Deep Brain Stimulation). In pain stim, the market is gaining from Inceptive launch in the United States. In brain stim, Percept RC with BrainSense is registering strong sales.
Medtronic’s Key Downsides
Margins Continue to Shrink: Medtronic is currently affected by the industry-wide increase in costs and expenses stemming from geopolitical concerns. The constant rise in raw material and labor costs, as well as the oil price volatility, is denting the company’s profit. Further, a rising interest rate leading to increasing borrowing costs is concerning. In the first quarter of fiscal 2025, gross margin contracted 76 basis points to 65.1% on a 5.1% rise in the cost of revenues. Further, selling, general and administrative expenses rose 1.6% year over year. Adjusted operating margin contracted 25 bps year over year to 23%.
Image Source: Zacks Investment Research
Exposure to Currency Movement: With Medtronic recording a significant portion of its sales from the international market, it remains highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the last few quarters.
MDT’s Estimate Trend
The Zacks Consensus Estimate for Medtronic’s fiscal 2025 earnings has remained unchanged at $5.44 per share in the past 30 days.
The consensus estimate for fiscal 2025 revenues is pegged at $33.60 billion, which indicates a 3.8% increase from the year-ago number.
TransMedix Group’s earnings are expected to surge 255.8% in 2024. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 197.1% in the past year compared with the industry’s 22.7% growth. TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AxoGen, carrying a Zacks Rank of 2 at present, has an earning yield of 94.1% compared with the industry’s 12.3%. Shares of the company have risen 180.6% compared with the industry’s 22.7% growth over the past year. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.46%.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry’s 15.7%. In the past year, shares of BSX have risen 58.7% compared with the industry’s 24.2% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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Reasons to Retain Medtronic Stock in Your Portfolio Now
Medtronic plc’s (MDT - Free Report) growth is backed by remarkable progress within the Neurosurgery Portfolio. The company’s continuous efforts to capture several growth markets look impressive. Meanwhile, headwinds from adverse foreign exchange effects pose a challenge to Medtronic’s operations. Mounting costs and expenses due to geopolitical conditions also add to the worry.
In the past year, this Zacks Rank #3 (Hold) stock has risen 15.6% compared with the industry’s 24.2% growth. The S&P 500 composite has witnessed a 33.7 % increase in the same time frame.
The renowned medical device company has a market capitalization of $115.47 billion. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 3.07%.
Let’s delve deeper.
Medtronic’s Key Upsides
Strategic Focus to Capture Several Growth Markets: Medtronic has categorized its businesses based on three major growth markets — Established market leaders, Synergistic and Highest Growth. In order to capture shares within these markets, the company is focusing on several initiatives, including new product launches, enhanced application of AI across the portfolio and maintaining pricing while maximizing efficiencies in the operating overhead. Currently, Medtronic is initiating many new product cycles, in markets like diabetes, pulse field ablation, TAVR, neuromodulation, hypertension and robotics.
During the fiscal first quarter, the company’s Highest Growth businesses jointly grew 8%, which comprised 21% of the company’s consolidated revenues. Established market leaders businesses made up just under half of the total revenues and grew 5% year over year. Within Synergistic businesses, neuromodulation was the primary growth driver in the fiscal first quarter, growing 10%, well above the market.
Neurosurgery Portfolio Shows Strong Growth Prospects:Within the Neuroscience portfolio, the Cranial, Spinal technologies business has been registering strong growth in recent quarters. The continued adoption of the AiBLE ecosystem led to strong mid-single digits growth within the Cranial, Spinal technologies. The company's ENT business within the Specialty Therapies division in the Neuroscience portfolio continues to contribute positively, banking on the continued adoption of Propel and Sinuva that came from the Inceptiv acquisition.
In Neuromodulation, the company is gaining new implant share in both pain Stim and DBS (Deep Brain Stimulation). In pain stim, the market is gaining from Inceptive launch in the United States. In brain stim, Percept RC with BrainSense is registering strong sales.
Medtronic’s Key Downsides
Margins Continue to Shrink: Medtronic is currently affected by the industry-wide increase in costs and expenses stemming from geopolitical concerns. The constant rise in raw material and labor costs, as well as the oil price volatility, is denting the company’s profit. Further, a rising interest rate leading to increasing borrowing costs is concerning. In the first quarter of fiscal 2025, gross margin contracted 76 basis points to 65.1% on a 5.1% rise in the cost of revenues. Further, selling, general and administrative expenses rose 1.6% year over year. Adjusted operating margin contracted 25 bps year over year to 23%.
Image Source: Zacks Investment Research
Exposure to Currency Movement: With Medtronic recording a significant portion of its sales from the international market, it remains highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the last few quarters.
MDT’s Estimate Trend
The Zacks Consensus Estimate for Medtronic’s fiscal 2025 earnings has remained unchanged at $5.44 per share in the past 30 days.
The consensus estimate for fiscal 2025 revenues is pegged at $33.60 billion, which indicates a 3.8% increase from the year-ago number.
Key Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , AxoGen (AXGN - Free Report) and Boston Scientific (BSX - Free Report) .
TransMedix Group’s earnings are expected to surge 255.8% in 2024. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 197.1% in the past year compared with the industry’s 22.7% growth. TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
AxoGen, carrying a Zacks Rank of 2 at present, has an earning yield of 94.1% compared with the industry’s 12.3%. Shares of the company have risen 180.6% compared with the industry’s 22.7% growth over the past year. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.46%.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry’s 15.7%. In the past year, shares of BSX have risen 58.7% compared with the industry’s 24.2% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.