Excerpts from Medtronic's Confab - Analyst Blog

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Recently, Medtronic ( MDT ) debriefed analysts about its ongoing performance in various divisions and markets during the Barclays Global Healthcare Conference. Below are the excerpts from the confab.

The European market dragged the performance of the company in the past few quarters. The company witnessed softness in the European market in the last quarter as well. However, the performance in the region is gradually improving. Additionally, Medtronic is planning to gain reimbursement for its offerings in many European nations. This should boost performance in the region.

With the Implantable Cardioverter Defibrillator (ICD) and Spine divisions in the U.S. representing one-third of the company's business, the sluggish U.S. market for ICDs and Spine (which declined high single-digits to double-digits in last few quarters) hampered the performance of Medtronic and hurt growth in the last two years. Growth in other franchises also could not offset this adverse impact. However, management witnessed signs of stability in the domestic ICD and Spine market. Further, Medtronic is also gaining market share in ICD and Spine. However, pricing pressure prevails for the company.

According to management, the CRM (Cardiac Rhythm Management) market will grow in single-digits. While the company is capturing market share in Cardiac Rhythm Disease Management (CRDM) division on the back of newer products, it is gaining share in cardiovascular space with the recent launch of its Resolute Integrity in the U.S. as well as Japan.

The company continues to record 20% growth in the emerging markets, accounting for half of its overall growth. The adoption of its ICDs and pacers in the emerging market continues to improve. Moreover, commercialization of new products should accelerate growth in the emerging markets.

After acquiring China Kanghui Holdings, which will likely add strength to its orthopedic franchise in that country, Medtronic is keeping an eye on accretive buyouts in the region. This should expand Medtronic's foothold in the emerging markets as it plans to achieve 20% of its revenues from emerging markets by fiscal 2015−16.

Medtronic expects revenue growth towards the higher end of the expected growth rate of 3%-4% for top line. The company also expects to record earnings per share towards the high end of the outlook band of $3.66 and $3.70 for fiscal 2013. Medtronic is slated to release fourth-quarter results on May 21, 2013.

The stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for this medical device major, other medical stocks that warrant a look are Abaxis ( ABAX ), Conceptus ( CPTS ) and Edwards Lifesciences ( EW ). These stocks carry a Zacks Rank #2 (Buy).



ABAXIS INC (ABAX): Free Stock Analysis Report

CONCEPTUS INC (CPTS): Free Stock Analysis Report

EDWARDS LIFESCI (EW): Free Stock Analysis Report

MEDTRONIC (MDT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ABAX , CPTS , EW , MDT

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