Medtronic Review Post Q1 Results

Medtronic (NYSE:MDT), a global leader in medical technology, services, and solutions, reported its earnings for the fourth quarter of fiscal year 2024 on Thursday, May 23, before the market opened. The company's earnings per share (EPS) of $1.46 slightly surpassed the estimated EPS of $1.45, showcasing Medtronic's ability to exceed analyst expectations. Additionally, Medtronic reported revenue of approximately $8.59 billion, exceeding the estimated revenue of about $8.45 billion. This performance indicates a positive outcome for Medtronic in the recent May earnings report, reflecting the company's resilience and strategic growth initiatives in the face of industry challenges.

Despite facing a decrease of 7.5% in adjusted EPS from the same quarter in the previous year, Medtronic's financial results highlight its operational efficiency and market adaptability. The company's GAAP EPS, which includes various one-time adjustments such as restructuring and associated costs, was significantly lower at 49 cents, down 44.3% from the year-ago quarter. However, for the full fiscal year, Medtronic reported adjusted earnings of $5.53 per share, an increase of 4.5% from the previous year, beating the Zacks Consensus Estimate by 6.3%. This demonstrates Medtronic's ability to navigate through fiscal challenges while still delivering growth.

Medtronic's revenue growth was attributed to strong performance across several of its businesses, including Cranial & Spinal Technologies, Diabetes, Cardiac Pacing, and Surgical. The company's worldwide revenues for the quarter were $8.59 billion, a slight increase of 0.5% on a reported basis and 5.4% on an organic basis from the year-ago period, exceeding the Zacks Consensus Estimate by 1.8%. The total revenues for fiscal 2024 reached $32.36 billion, up 3.6% from the previous year and slightly above the Zacks Consensus Estimate by 0.5%. This revenue growth, coupled with strategic regulatory achievements such as receiving U.S. FDA approval for its Evolut™ FX+ TAVR system and Inceptiv™ closed-loop spinal cord stimulator, underscores Medtronic's broad-based, durable growth across various segments.

Furthermore, Medtronic's financial health is evident in its cash flow from operations for FY24, which was $6.8 billion, a 12% increase from the previous year. The company's free cash flow rose by 14% to $5.2 billion, demonstrating its strong cash generation capabilities. Medtronic has been proactive in returning value to its shareholders, with $5.5 billion returned in FY24, including $1.6 billion through net share repurchases in Q4 alone. The increase in its quarterly dividend to $0.70 per share, marking the 47th consecutive year of dividend increases, reflects Medtronic's commitment to shareholder value and its confidence in the company's financial stability and growth prospects.

In summary, Medtronic's latest earnings report for the fourth quarter of fiscal year 2024 highlights the company's ability to exceed expectations, navigate challenges, and continue its growth trajectory. With strategic investments in innovation, a focus on operational efficiency, and a commitment to returning value to shareholders, Medtronic is well-positioned for sustained success in the healthcare sector.

Shares of Medtronic (NYSE:MDT) climbed more than 3% pre-market today following the announcement of third-quarter results that exceeded analyst expectations, prompting the company to uplift its financial outlook for the 2024 fiscal year. Medtronic reported an adjusted earnings per share (EPS) of $1.30, which was $0.04 above the analyst consensus of $1.26. Moreover, the company's quarterly revenue reached $8.1 billion, outperforming the anticipated $7.95 billion by analysts.

Medtronic updated its forecast for organic revenue growth in fiscal 2024, increasing it from the initially projected 4.75% to a range of 4.75% to 5%. Furthermore, the adjusted EPS outlook for 2024 was adjusted upwards from the previous range of $5.13 to $5.19 to a new range of $5.19 to $5.21, attributed to the strong performance in the third quarter.

Medtronic (NYSE:MDT) shares have been double-downgraded to Sell from Buy by UBS due to anticipated near-term sales and EPS downside risk. The new price target is $79 per share, a significant drop from the prior target of $127. The analysts believe that Medtronic's ongoing transformation will require more time, and lack confidence that the company can achieve sustainable mid-single-digit top-line growth and consistent operating margin improvement.

UBS predicts that Medtronic's sales will grow at a CAGR of 3.8%, which is lower than the consensus estimate of 4.8%. Additionally, UBS' survey shows minimal diabetes share gains. It expects that in 2024 and 2025, the company's EPS will be lower than consensus estimates by low-single-digits and high-single-digits, respectively, mainly due to lower sales. While Medtronic may gain marginal share in some businesses, such as Evolut FX in TAVR (Transcatheter Aortic Valve Replacement), the company is losing share in other areas such as cryo, peripheral, and diabetes.

Medtronic (NYSE:MDT) reported its Q3 results, with both EPS of $1.30 and revenue of $7.7 billion coming in better than the Street estimates of $1.27 and $7.54 billion, respectively.

Better-than-expected revenue was driven by beats across all of its business segments, with headwinds abating in ventilator sales and product availability.

The company raised its 2023 guidance, now expecting FX rates to negatively impact Q4 revenue by $165-215 million and guided to 2023 EPS of $5.28-$5.30 (prior guidance of $5.25-5.30), which includes an $0.21 FX headwind as of current rates.

The company continues to expect expense reductions to help offset headwinds e.g. inflation, interest, FX, and taxes. Additionally, the company noted it expects organic growth of 4.5-5.0% in Q4.

Medtronic (NYSE:MDT) reported its Q3 results, with both EPS of $1.30 and revenue of $7.7 billion coming in better than the Street estimates of $1.27 and $7.54 billion, respectively.

Better-than-expected revenue was driven by beats across all of its business segments, with headwinds abating in ventilator sales and product availability.

The company raised its 2023 guidance, now expecting FX rates to negatively impact Q4 revenue by $165-215 million and guided to 2023 EPS of $5.28-$5.30 (prior guidance of $5.25-5.30), which includes an $0.21 FX headwind as of current rates.

The company continues to expect expense reductions to help offset headwinds e.g. inflation, interest, FX, and taxes. Additionally, the company noted it expects organic growth of 4.5-5.0% in Q4.

Medtronic plc (NYSE:MDT) shares closed more than 4% lower yesterday after RBC Capital downgraded the company to Sector Perform from Outperform and lowered its price target to $89 from $102.

According to analysts, there is significant dissatisfaction among investors regarding the way the company's management has handled several issues (e.g. warning letter, supply impact, RDN). Additionally, they believe that the company's recovery has been slower than expected and that it is facing ongoing challenges due to macroeconomic conditions. While the situation may improve in the future, it is unlikely that the company will perform significantly better than its competitors, due to the loss of credibility it has experienced.

The company cut its fiscal 2023 organic growth outlook from approximately 5% in Feb to 1.4-1.6% in Nov due to supply constraints as well as slower recovery in certain sub-segments such as neuromodulation, TAVR, basic coronary PCI, and other general surgery procedures. Full-year EPS outlook was lowered throughout the year as well due to lower organic sales growth, and pressures related to FX, inflation, and supply. The company now expects 2023 EPS to be in the range of $5.25-5.30 (down 5.7-6.6% year-over-year).

Medtronic (NYSE:MDT) reported its Q2 results on Tuesday, with EPS of $1.30 coming in better than the Street estimate of $1.28. Revenue was $7.6 billion, compared to the Street estimate of $7.7 billion.

Management noted supply chain issues (particularly in Surgical Innovations) took longer than expected to resolve in Q2, impacting the H2 ramp (including lost sales to a competitor, sales management anticipates recapturing).

The company expects fiscal 2023 EPS to be in the range of $5.25-$5.30, compared to the Street estimate of $5.53. Management anticipates H2/2023 revenue growth in the range of 3.5%-4.0% on an organic basis, an acceleration over H1.