Medtronic Has Guided for a Robust EPS Performance in 2020

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.