Medtronic (MDT) Benefits from Strength Across Business Groups

On Aug 23, we issued an updated research report on Medtronic plc MDT. Increased adoption of the company's globally accepted advanced therapies is encouraging. The stock has a Zacks Rank #2 (Buy).

Over the past year, shares of Medtronic have outperformed the industry. The stock has returned 12.3% compared with the industry's 4.5% rise.

Medtronic exited the first quarter of fiscal 2020 on a promising note with better-than-expected numbers. All major business groups contributed to solid top-line growth at CER, which highlighted sustainability across groups and regions, in addition to displaying successful achievement of synergy targets.

Medtronic PLC Price

Medtronic PLC Price

Medtronic PLC price | Medtronic PLC Quote

Within Restorative Therapies Group (RTG), the neurosurgery business was robust led by strong uptake of Mazor X Stealth navigated robotic system.

Within Cardiac & Vascular Group (CVG), despite ongoing challenges, multiple product lines showed exceptional strength in the quarter with high single-digit growth from Reveal LINQ insertable loop recorder as well as Arctic front cryoablation. Double-digit growth was witnessed in VenaSeal Closure System and TYRX absorbable antibacterial envelope.

The Minimally Invasive Therapies Group (MITG) arm demonstrated sturdy growth in the reported quarter on strength in Advanced Stapling and Advanced Energy. Further, the company overcame challenges related to a supplier’s sterilization facility shutdown in February, returning to full sterilization capacity during the quarter.

Within Diabetes group, International business grew 20%, banking on strong rollout of the MiniMed 670G in new markets. In addition, the company is experiencing strong adoption of the Guardian Connect Smart CGM system, which grew in the high 80s in the reported quarter. In fiscal 2020, Medtronic expects to launch its MiniMed 780G (its advanced hybrid closed-loop system with bluetooth connectivity).

We are currently hopeful about the company's newly-launched restructuring initiative called Enterprise Excellence plan, aimed at $3-billion annual growth run rate savings by the end of fiscal 2022. Per the company, this new program has been designed to increase its effectiveness, enable reinvestment for growth and drive consistent margin expansion and EPS leverage.

On the flip side, the company has been grappling with steep costs and expenses, which weigh heavily on its bottom line.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Amedisys, Inc. AMED, Baxter BAX and NuVasive NUVA, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amedisys has a long-term earnings growth rate of 16.3%.

Baxter’s long-term earnings growth rate is projected at 12.8%.

NuVasive’s long-term earnings growth rate is expected to be 12.8%.

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