27 May

Medtronic Has Guided for a Robust EPS Performance in 2020

WRITTEN BY Margaret Patrick

EPS guidance

In its fiscal 2019 fourth-quarter earnings investor presentation, Medtronic (MDT) guided for non-GAAP (generally accepted accounting principles) EPS of $5.44–$5.50 for fiscal 2020, assuming a $0.10 negative impact due to foreign exchange at current rates.

This guidance implies a YoY (year-over-year) rise of 6%–7% on a constant currency basis. On its fourth-quarter earnings conference call, Medtronic guided for non-GAAP EPS of $1.17–$1.19 for the first quarter of fiscal 2020 assuming a $0.04 negative impact due to foreign exchange at current rates.

Medtronic Has Guided for a Robust EPS Performance in 2020

Wall Street estimates

Medtronic reported non-GAAP EPS of $5.22, a YoY rise of 11.5% on a pro forma basis, ahead of the guidance of 9.0%–10% analysts had provided for fiscal 2019.

Analysts expect Medtronic’s non-GAAP EPS to see YoY rises of 4.57% to $5.46 in fiscal 2020, 8.44% to $5.92 in fiscal 2021, and 8.67% to $6.43 in fiscal 2022.

Analysts also expect Medtronic’s non-GAAP EPS to see YoY rises of 1.29% to $1.19 in the first quarter, 4.97% to $1.28 in the second quarter, 6.48% to $1.37 in the third quarter, and 4.99% to $1.62 in the fourth quarter of fiscal 2020.

Gross margin performance and guidance

In the fourth quarter, Medtronic reported a non-GAAP gross margin of 69.9%, a YoY contraction of 90 basis points. In fiscal 2019, the company reported a GAAP gross margin of 70.36%, a YoY expansion of 31 basis points.

Analysts expect Medtronic’s GAAP gross margin to contract 13 basis points YoY to 70.23% in fiscal 2020, to expand 15 basis points YoY to 70.39% in fiscal 2021, and to contract three basis points YoY to 70.36%in fiscal 2022. Medtronic expects foreign exchange headwinds to affect its gross margin in fiscal 2020.

Analysts expect Medtronic’s GAAP gross margin to contract 68 basis points YoY to 69.72% in the first quarter, to contract 53 basis points YoY to 70.37% in the second quarter, to expand two basis points YoY to 70.32% in the third quarter, and to expand 44 basis points to 70.39% in the fourth quarter of fiscal 2020.

Latest articles

On October 17, Cannabis 2.0 legalized edibles, beverages, and concentrates in Canada. As the country waits for the benefits, is Cannabis 3.0 next?

Prohibition Partners expects that by 2024, the legal cannabis market could reach $103.9 billion and the medical cannabis market could reach $62.6 billion.

The cannabis sector was trading in the red today. MKM Partners lowered its revenue estimates for Canopy Growth (CGC) (WEED) and Aurora Cannabis (ACB).

Ford plans to unveil its crossover SUV, the Mach-E, on November 17. Ford committed $11.5 billion toward the electrification of its fleet through 2022.

This week is important for the cannabis sector, as Canopy Growth and Aurora Cannabis are both set to report their earnings results on November 14.

Currently, 33 states and Washington, D.C., have legalized medical cannabis, but it's illegal in Kansas. Even having a small amount is considered a crime.