What Investors Can Expect from Medtronic’s Fiscal 1Q18 Results



Fiscal 1Q18 earnings results

Medtronic (MDT) plans to release its fiscal 1Q18 results on August 22, 2017. Medtronic is the biggest pure-play medical technology company in the United States. It has a market capitalization of around $103 billion. The company exceeded its revenue as well as earnings estimates in 4Q17.

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Fiscal 4Q17 highlights

In fiscal 4Q17, Medtronic’s revenue came in at $7.9 billion, representing YoY (year-over-year) growth of ~5%. Revenues saw a negative impact of $50 million from currency headwinds. All four business segments of the company, namely CVG (Cardiac and Vascular Group), MITG (Minimally Invasive Therapies Group), RTG (Restorative Therapies Group), and Diabetes, witnessed mid-single-digit sales increases.

In 4Q17, Medtronic’s adjusted diluted EPS (earnings per share) came in at $1.33, ahead of analysts’ estimates of $1.31. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) came in around $3.1 billion in fiscal 4Q17 compared to $2.3 billion in 3Q17 and $2.5 billion in 4Q16. The company’s operating margin performance exceeded analysts’ expectations with a ~40-basis-point YoY margin expansion. In 3Q16, Medtronic had registered a contraction of 380 basis points in its operating margin. On an organic basis, the company’s operating margin improved by around 70 basis points.

Peers Thermo Fisher Scientific (TMO), Abbott Laboratories (ABT), and Stryker (SYK) reported operating margins of ~15.1%, 6.4%, and 16.6%, respectively, in their recently ended quarters. Investors interested in gaining exposure to Medtronic can invest in the Vanguard S&P 500 ETF (VOO), which has ~0.85% of its total holdings in MDT.

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Company guidance for fiscal 1Q18

In fiscal 1Q18, Medtronic expects to register constant currency revenue growth similar to that in 4Q17. The company’s 1Q18 constant currency EPS growth is expected to be in the high single digits. The company expects to see a negative impact of $0.03 to $0.05 per share from currency headwinds.

The diabetes segment is expected to be driven by the 670G Priority Access Program implementation. All the other business segments of the company are expected to maintain momentum and grow at the same pace as they did in the previous quarter.

Series overview

In this series, we’ll look at the analysts’ estimates for Medtronic’s 1Q18 revenue and earnings results. We’ll also look at some recent developments in the company. Plus, we’ll discuss Medtronic’s recent stock performance and analyst recommendations.


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