On Thursday, financial firm Piper Sandler maintained its Neutral stance on shares of Medtronic , Inc. (NYSE:NYSE:MDT), a leading medical technology company, with a consistent price target of $90.00. The firm's analysis anticipates the approval of Medtronic’s second Pulsed Field Ablation (PFA) catheter, Sphere-9, by the FDA before the end of the year. The approval is expected to significantly enhance Medtronic's footprint in a rapidly expanding medtech segment.
The Sphere-9 catheter is projected to compete effectively with other ablation technologies, offering comparable clinical outcomes. Its potential to improve procedural efficiencies and economics is likely to stimulate demand.
Despite these positive aspects, Piper Sandler advises investors to moderate their expectations in the initial phase following the product's launch. The firm points to potential challenges such as Medtronic's manufacturing capacity and the availability of mapping specialists, which may lead to a gradual rollout. A six-month gap is expected between FDA approval and a noticeable impact on the company's revenue.
Medtronic's ablation revenue over the next year is predicted to grow at a rate below the market average. This is attributed to the company's PulseSelect product only partially compensating for the decline in cryogenic ablation sales, despite the advantage of higher average selling prices (ASPs). The firm's cautious outlook on Medtronic reflects these concerns, leading to the reiteration of the Neutral rating.
The analysis underscores the importance of the Sphere-9 catheter to Medtronic's strategy in the medical technology market, while also highlighting the hurdles the company may face in scaling up its new product. The forecasted slow launch ramp and the anticipated delay in revenue contribution are critical factors in the firm's assessment.
In other recent news, Medtronic has reported a 5.3% increase in revenue for the first quarter of fiscal 2025, exceeding expectations. The company's strong financial performance has led to an upward revision in its full-year revenue and earnings per share (EPS) guidance.
Truist Securities and Mizuho have raised their price targets for Medtronic, while Piper Sandler and Wells Fargo have maintained their Overweight ratings. However, Goldman Sachs has held its Sell rating, citing ongoing growth in operating expenses and uncertainties in other income and expenses.
Oppenheimer, on the other hand, has increased Medtronic's price target while maintaining a Perform rating, highlighting the company's improved FY25 guidance and potential growth drivers. Medtronic has also been actively repurchasing shares in the open market, with around $4 billion in buybacks over the past two quarters.
InvestingPro Insights
As Medtronic, Inc. (NYSE:MDT) anticipates the approval of its Sphere-9 catheter, a closer look at the company's financial health and market performance is essential. According to InvestingPro data, Medtronic boasts a solid market capitalization of $115.87 billion, reflecting its significant presence in the healthcare equipment and supplies industry. The company's P/E ratio stands at a high 30.28, suggesting a premium valuation relative to near-term earnings growth. Despite this, Medtronic's commitment to shareholder returns is evident, with a consistent dividend growth over the last decade and a current yield of 3.1%.
InvestingPro Tips highlight Medtronic's proactive approach to capital management, as the management has been aggressively buying back shares. Additionally, the company's longstanding track record of dividend payments, spanning 48 consecutive years, signals a strong commitment to providing shareholder value. This is further supported by the fact that Medtronic's cash flows can sufficiently cover interest payments, ensuring financial stability. For investors seeking more detailed analysis, there are additional tips available on InvestingPro, including insights into the company's profitability and stock volatility.
It's worth noting that while Medtronic is trading near its 52-week high, analysts have revised their earnings expectations downwards for the upcoming period. This dichotomy between stock performance and earnings outlook may be a point of consideration for investors. For those interested in exploring further, additional InvestingPro Tips are available, providing a comprehensive understanding of Medtronic's financial nuances and market position.
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