By Bhanvi Satija and Raghav Mahobe
(Reuters) -Medtronic Plc on Thursday forecast annual profit below Wall Street estimates, as a strong U.S. dollar and persistently high costs of raw goods weighed on the medical device maker's earnings, sending its shares down more than 4% in early trading.
The company warned in February that rising raw material prices and high wages due to stubbornly high inflation would continue to impact its full-year profit.
Medtronic (NYSE:MDT) forecast profit of $5 per share to $5.10 per share for the fiscal year 2024, below analysts' estimates of $5.20 per share, according to Refinitiv.
Some analysts called the forecast conservative and said the company could increase it later in the year, given that non-urgent medical procedures using its devices have started to recover from its trough reached during the pandemic.
With non-urgent surgeries coming back and the recent approval of a new version of its insulin pump, "the guide does seem conservative to us," Evercore ISI analyst Vijay Kumar said in a note.
The Dublin-based company announced job cuts last month, with numbers undisclosed, while it is also looking to offload some of its smaller businesses such as patient monitoring and respiratory interventions to focus on its core units - heart and diabetes.
On Thursday, Medtronic said it will buy South Korea-based insulin patch maker EOFlow for a total consideration of 971 billion won ($738 million) to add wearable patches to its diabetes portfolio.
Medtronic expects EOFlow's wearable and disposable insulin delivery devices to compliment its glucose monitoring systems, MiniMed 780G, which was recently approved in the U.S.
The deal was "one of our traditional tuck-in type of deals," CEO Geoff Martha said, adding Medtronic still has a lot of appetite for similar deals.
Excluding items, the company reported a profit of $1.57 per share for the quarter, slightly above analysts' estimates of $1.56 per share.