December 9, 2022

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MDT Stock Crashes To Two-Year Low On Sales Lag — Is There A Silver Lining?

2 min read

Medtronic (MDT) early Tuesday reported mixed earnings and lighter-than-expected organic sales growth, leading MDT stock to tumble.


During the fiscal second quarter, adjusted Medtronic earnings of $1.30 per share fell 2% year over year but topped expectations by two cents, according to FactSet. Sales dipped 3% on a strict, as-reported basis to $7.59 billion. But analysts had projected nearly $7.7 billion.

The company also lowered its earnings guidance for the year.

“Our expectations were low for the quarter, but the results were still a disappointment,” Edward Jones analyst John Boylan said in a report. “However, this is not where our focus lies as we believe the drivers for this quarter’s issues should resolve themselves over time and most are not unique to Medtronic.”

In early trading on today’s stock market, MDT stock toppled 5.3% near 77.90. Shares opened at their lowest point since March 2020.

MDT Stock: TAVR, Diabetes Offer Bright Spots

Organically, sales increased just 2% and missed Medtronic’s guidance for 3% to 3.5% growth, Evercore ISI analyst Vijay Kumar said in a report. The main source of the decline were the medical-surgical and cardiovascular group businesses. Sales in both came in below expectations.

But Kumar noted bright spots in the quarter included Medtronic’s nonsurgical method of replacing a faulty heart valve and the diabetes business. Sales of transcatheter aortic heart valve replacement, or TAVR, devices grew by a midteens percentage. Diabetes devices sales slid 5% on a reported basis with a double-digit decline in the U.S. due to no new product approvals. But organic sales inched up 3%.

Kumar kept his outperform rating and 105 price target on MDT stock.

The diabetes business has been under pressure. In late 2021, the Food and Drug Administration issued a warning letter following an inspection of Medtronic’s diabetes unit. The company is still working on a next-generation continuous glucose monitor called Simplera and is hoping…

2022-11-22 10:23:18

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