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Medtronic Has Guided for a Modest Revenue Performance in 2020

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Revenue guidance

In its fiscal 2019 fourth-quarter earnings investor presentation, Medtronic (MDT) guided for YoY (year-over-year) organic revenue growth of +/- 4% for fiscal 2020. Assuming constant foreign exchange rates, the company has estimated a negative YoY revenue impact of 1.0%–1.5% for fiscal 2020. Based on these revenue growth projections, the company has guided for revenue in the range of +/- $31.3 billion–$31.5 billion for fiscal 2020.

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On its fourth-quarter earnings conference call, Medtronic guided for YoY organic revenue growth of 2%–2.5% and a negative revenue impact due to foreign exchange at a current rate of 2.1%–2.6% in the first quarter of fiscal 2020. Medtronic expects to report lower-than-normal sequential revenue growth in the first quarter of fiscal 2020. According to its fourth-quarter earnings conference call, this projection is partly based on its stronger-than-expected revenue performance in the fourth quarter of fiscal 2019 and the ongoing uncertainty associated with paclitaxel-coated balloons in its peripheral business.

Further, temporary challenges associated with the shutdown of a facility of one of Medtronic’s minimally invasive therapies group business’s key sterilization suppliers is also expected to have a detrimental impact on the company’s first-quarter revenue performance. To learn more about the regulatory challenges faced by Medtronic’s paclitaxel-coated balloons business, read A Look at Boston Scientific’s Gross Margin in 2019.

Wall Street estimates

Medtronic reported revenue of $30.56 billion, a YoY rise of 5.5% on an organic basis, ahead of the guidance of 4.0%–4.5% it provided for fiscal 2019.

Analysts expect Medtronic’s revenue to see YoY rises of 3.04% to $31.49 billion in fiscal 2020, 4.63% to $32.94 billion in fiscal 2021, and 4.94% to $34.57 billion in fiscal 2022.

Analysts also expect Medtronic’s revenue to see YoY rises of 0.27% to $7.40 billion in the first quarter, 2.23% to $7.65 billion in the second quarter, 3.81% to $7.83 billion in the third quarter, and 4.69% to $8.53 billion in the fourth quarter of fiscal 2020.

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