On Tuesday, Baird made an adjustment to the financial outlook for Medtronic , Inc. (NYSE:MDT), increasing the price target on the company's shares to $96.00 from the previous $90.00. Despite the price target hike, the firm maintained a Neutral rating on the stock.
Medtronic has been consistent in its performance, achieving mid-single-digit (MSD) top-line growth over the past seven quarters. The analyst from Baird anticipates that Medtronic's second quarter fiscal year 2025 revenue and adjusted earnings per share (EPS) will exceed consensus expectations. Attention is drawn to the cautiousness of the fiscal year 2025 guidance and the durability of the high-single-digit (HSD) adjusted EPS growth rates projected for the second half of fiscal year 2025.
The company's adjusted EPS growth in the latter half of fiscal year 2025 is seen as promising, supported by strategic initiatives aimed at mitigating year-over-year operating margin (OM) compression. The analyst notes that Medtronic's EPS growth is currently being buoyed by share repurchases, a factor that may overshadow operating margin expansion as a driver of earnings growth.
The report emphasizes the need for greater clarity on the long-term sustainability of earnings growth driven by operating margin expansion. Until such visibility is obtained, the analyst's stance on Medtronic remains neutral, despite the increased price target. Medtronic's financial performance and strategic efforts continue to be closely monitored by market analysts.
In other recent news, Medtronic has been the subject of several analyst evaluations and company developments. RBC Capital Markets upgraded Medtronic's rating from Sector Perform to Outperform due to improved business fundamentals and management's execution capabilities. This upgrade comes alongside a voluntary field action initiated by Medtronic for its MiniMed™ 600 and 700 series insulin pumps due to potential battery issues.
In the realm of analyst notes, TD Cowen maintained a Buy rating for Medtronic, citing anticipated growth in the Cardiac and Spinal Technologies (CST) and Spine sectors, driven by the company's artificial intelligence-powered ecosystem, AiBLE. Meanwhile, Piper Sandler maintained a Neutral stance, anticipating the approval of the company's second Pulsed Field Ablation (PFA) catheter, Sphere-9, by the FDA.
Truist Securities raised its price target for Medtronic following the company's first-quarter earnings, which surpassed revenue expectations. The company also revised its revenue and earnings per share (EPS) guidance upwards. However, Goldman Sachs reiterated its Sell rating on Medtronic, citing continuous growth in operating expenses and uncertainties in other operating income and expenses.
InvestingPro Insights
Medtronic's recent performance aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at $115.44 billion, reflecting its significant presence in the Healthcare Equipment & Supplies industry. Medtronic's revenue for the last twelve months reached $32.58 billion, with a modest growth of 3.23%, consistent with the mid-single-digit top-line growth mentioned in the article.
InvestingPro Tips highlight Medtronic's financial stability and shareholder-friendly policies. The company has maintained dividend payments for 48 consecutive years and has raised its dividend for 10 consecutive years, demonstrating a strong commitment to returning value to shareholders. This aligns with the article's mention of share repurchases boosting EPS growth.
The current P/E ratio of 30.17 and the forward P/E ratio of 23.47 for the last twelve months as of Q1 2025 suggest that investors are pricing in future growth expectations. However, an InvestingPro Tip notes that Medtronic is trading at a high P/E ratio relative to near-term earnings growth, which may warrant caution and supports the analyst's neutral stance.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 11 more tips available for Medtronic.
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