On Tuesday, Truist Securities revised its price target for Medtronic , Inc. (NYSE:MDT) shares, a global leader in medical technology, services, and solutions. The firm has adjusted the price target downward to $85 from the previous figure of $88 while retaining a Hold rating on the stock.
The adjustment came after considering Medtronic's earnings prospects and its position relative to industry peers. The new price target is based on a 15 times multiple applied to the company's projected earnings per share (EPS) for the calendar year 2025.
This is a slight reduction from the prior multiple of 15.5 times. The rationale behind this multiple is that it represents a discount to the larger group of diversified comparable companies, which typically trade at a 20 times multiple.
The analyst's decision to apply a discount is based on Medtronic's mid-single-digit (MSD) EPS growth prospects, which fall below the peer group average. Despite this conservative valuation, the analyst suggests that there is potential for the multiple to expand. This expansion is contingent upon Medtronic providing greater visibility into its revenue and EPS growth acceleration or demonstrating a significant upside to EPS.
The analyst's commentary highlights the potential for Medtronic's valuation to improve if the company can show a more robust growth trajectory or outperform earnings expectations. The current market sentiment, as reflected by this Hold rating, indicates a cautious but watchful approach to Medtronic's stock performance in the near term.
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