What Analysts Recommend for Medtronic in September 2017
Performance in 1Q18
In 1Q18, Medtronic (MDT) reported revenues close to $7.4 billion, which is 3% year-over-year (or YoY) growth on a reported basis and 4% YoY operational growth. Medtronic’s fiscal year ends on the last Friday in April. On July 30, 2017, Medtronic completed the divestiture of its patient care, deep vein thrombosis, and nutritional insufficiency businesses, which were a part of the Patient Monitoring and Recovery division in the company’s Minimally Invasive Therapies segment, to Cardinal Health (CAH) for a consideration of around $6.1 billion. This deal is expected to be immediately accretive to Medtronic’s revenue and margin growth rates. However, the company has projected that this transaction will slightly dilute its 2018 earnings per share (or EPS). To know more about this deal, please refer to Divestiture of a Part of Medtronic’s PMR Business to Cardinal Health.
Medtronic entered this deal to divest its low growth and low margin businesses to free resources for exploring higher return opportunities that are more complementary to the company’s overall business model. If the company manages to effectively deploy proceeds from this divestiture to increase overall shareholder value, it may have a positive impact on Medtronic’s share prices as well as those of the SPDR S&P 500 ETF (SPY). Medtronic makes up about 0.52% of SPY’s total portfolio holdings.
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Analysts’ recommendations for Medtronic
Of the 24 analysts covering Medtronic in September 2017, five have rated the stock a “strong buy,” eight have rated it a “buy,” and 11 have rated it a “hold.”
Of the 24 analysts covering Boston Scientific (BSX) in September 2017, ~75.0% have rated the company a “buy.” Approximately 77.0% of the 22 analysts covering Edwards Lifesciences (EW) gave it a “buy” recommendation, while 63.0% of the 29 analysts tracking Zimmer Biomet Holdings (ZBH) rated it a “buy.”
In the next article, we’ll discuss Medtronic’s 2017 revenue growth prospects in greater detail.