On Thursday, Medtronic , Inc. (NYSE:MDT) received reaffirmation of a Buy rating and a $100.00 price target from a Stifel financial analyst. The company reported its sixth consecutive quarter of mid-single-digit top-line revenue growth at 5.4% organically, indicating a stable foundation in its business fundamentals. As Medtronic enters fiscal year 2025, starting in April, it anticipates that multiple new product launches will sustain this level of revenue growth.
In the fourth fiscal quarter of 2024, Medtronic's sales reached $8.59 billion, surpassing both the Stifel and consensus estimates of $8.41 billion and $8.44 billion, respectively. Additionally, the company's earnings per share (EPS) of $1.46 exceeded the $1.45 per share anticipated by both Stifel and consensus forecasts. For the upcoming fiscal year 2025, Medtronic has set forth financial guidance that aligns with consensus expectations, projecting 4-5% organic revenue growth and an EPS range of $5.40 to $5.50.
Despite the company's financial outperformance in the fourth quarter and the guidance for fiscal year 2025 aligning with expectations, shares of Medtronic traded lower, showing approximately a 4% decline. The potential reasons for the stock's underperformance include the expectation of back-half-weighted revenue growth and EPS guidance for FY2025, ongoing currency pressures, and a lack of clarity on the drivers of operating leverage.
InvestingPro Insights
Medtronic's recent performance and future outlook are underlined by a blend of stability and growth, as reflected in the company's fundamental and market data. According to real-time data from InvestingPro, Medtronic boasts a robust market capitalization of $108.04 billion, underscoring its significant presence in the healthcare equipment and supplies industry. With a P/E ratio of 25.98, which adjusts down to 21.0 for the last twelve months as of Q3 2024, the company trades at a premium, potentially due to its history of consistent dividend growth and low price volatility. The InvestingPro Tips highlight Medtronic's shareholder-friendly moves, such as raising its dividend for 10 consecutive years and maintaining dividend payments for an impressive 48 years. This commitment to shareholders is further demonstrated by the company's dividend yield of 3.22% as of March 2024.
While some investors may express concern over the high P/E ratio relative to near-term earnings growth, the company's revenue growth of 5.03% over the last twelve months as of Q3 2024, coupled with a gross profit margin of 65.72%, suggests a strong operational performance. Analysts' predictions of profitability for the year and the company's ability to cover interest payments with cash flows provide additional confidence in Medtronic's financial health. For investors seeking further insights, InvestingPro offers additional tips, including the company's liquidity position and stock volatility. Interested readers can unlock more expert analysis and tips on Medtronic at https://www.investing.com/pro/MDT, and can use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 9 additional InvestingPro Tips.
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