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A Look at Medtronic’s Earnings Trends and Guidance for Fiscal 2019

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Dec. 12 2018, Updated 3:15 p.m. ET

Earnings trends

Medtronic (MDT) reported net income of $1.1 billion in the second quarter of fiscal 2019 compared to $2.0 billion in the second quarter of fiscal 2018. Medtronic’s net income in the first half of fiscal 2019 totaled $2.2 billion compared to $3.0 billion in the same period the prior year. Wall Street analysts anticipate that Medtronic is expected to report net income of $1.25 billion in the third quarter of fiscal 2019.

Medtronic’s diluted EPS in the second quarter of fiscal 2019 amounted to $0.82 compared to $1.48 in the second quarter of fiscal 2018, reflecting a ~45% decline. In the first half of fiscal 2019, Medtronic reported diluted EPS of $1.61 compared to $2.21 in the same period the prior year.

In the third quarter, Abbott Laboratories (ABT) and Stryker (SYK) reported net income of $563.0 million and $590.0 million, respectively, reflecting a ~6.63% YoY decline and a ~35.94% YoY increase, respectively.

The earnings growth of Medtronic, Stryker, and Abbott Laboratories could boost the iShares U.S. Medical Devices ETF (IHI). Medtronic, Stryker, and Abbott Laboratories make up about ~8.87%, ~4.99%, and ~8.60% of IHI’s total portfolio holding, respectively.

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Guidance for fiscal 2019

After witnessing solid growth in the second quarter of fiscal 2019, Medtronic updated its financial guidance for fiscal 2019. Medtronic anticipates organic revenue growth for fiscal 2019 to be in the range of ~5.0% to ~5.5%. The company previously guided for an organic revenue growth range of ~4.5% to ~5.0%.

Medtronic also noted that if the present exchange rate continues for the rest of fiscal 2019, then the company’s revenues could be negatively affected by around $420.0 million to $520.0 million.

Wall Street analysts anticipate that Medtronic’s net revenues in fiscal 2019 will be around $30.6 billion in fiscal 2019, reflecting ~2.54% YoY growth.

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