Medtronic’s Stock Price Falls in Response to 1Q18 Revenue Miss



Stock movement

On August 22, 2017, Medtronic (MDT) announced its 1Q18 earnings results. Medtronic exceeded analysts’ EPS (earnings per share) estimate but missed the revenue estimate. Medtronic’s stock price fell ~0.6% in the pre-market trading session following the announcement.

Since its fiscal 4Q17 results announcement on May 25, 2017, Medtronic’s stock has fallen ~6.5%. In comparison, peers Abbott Laboratories (ABT), Boston Scientific (BSX), and Zimmer Biomet (ZBH) have seen stock price returns of 14%, -0.70%, and -4.6%, respectively.

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The graph above compares Medtronic’s and peers’ price movement. Medtronic expects to generate better growth across its top and bottom lines. It is expected to recover from near-term headwinds, and its innovative product pipeline and acquisition synergies will help drive the company’s growth over the medium-to-long term. Also, Medtronic has been generating margin growth over recent quarters, driven by its cost transformation initiatives, accelerated sales, and marketing programs.

Industry comparison

Medtronic has registered a stock price decline of around 9% over the last 12 months. The S&P 500, which represents the overall market’s performance, has returned ~11.7%, and the Health Care Select Sector SPDR ETF (XLV), which represents the broader US healthcare sector, has returned ~6.2%. Medtronic’s stock has followed a bearish trend over the last few quarters. Next, let’s discuss analysts’ post-1Q18 recommendations for Medtronic.


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