Medtronic stock holds as Raymond James maintains rating

On Tuesday, Raymond (NSE:RYMD) James maintained a Market Perform rating on Medtronic , Inc. (NYSE:MDT) following the company’s mixed fiscal third-quarter results. The healthcare giant, currently valued at $119 billion, is trading near its 52-week high, with InvestingPro analysis suggesting the stock is slightly overvalued at current levels. The firm highlighted that Medtronic’s revenue fell short of expectations, while adjusted earnings per share (EPS) surpassed projections. Surgical revenue was notably below Raymond James and consensus estimates, which Medtronic attributed to a shift in U.S. distributor purchasing patterns.

Despite the revenue miss, Medtronic experienced a year-over-year organic growth of 4.1%. The company maintains strong fundamentals with a gross profit margin of 65.4% and has demonstrated consistent shareholder returns, having maintained dividend payments for 48 consecutive years. Additionally, the adjusted EPS saw a 6.9% increase compared to the same period last year. This marks the first time in six quarters that Medtronic has reported margin expansion, even when considering foreign exchange as a persistent challenge.

Raymond James emphasized the strength of Medtronic’s margins, which improved for the first time in a year and a half. The company’s performance reflects resilience amid foreign exchange headwinds, which have been impacting the broader sector.

Looking ahead, Medtronic has not altered its annual guidance, suggesting confidence in its fiscal fourth-quarter projections. The company expects revenue to be between $8.80 billion and $8.90 billion, with the consensus at $8.9 billion. For EPS, the forecast is set at $1.56 to $1.62, closely aligned with the consensus estimate of $1.61.

The report by Raymond James underscores Medtronic’s ability to beat earnings expectations despite a challenging market environment. With the company holding steady on its annual projections, investors may watch closely to see if the positive trends in margins and earnings continue into the next quarter.

In other recent news, Medtronic has been making significant strides with its Symplicity Spyral Renal Denervation System. The Centers for Medicare & Medicaid Services (CMS) initiated a national coverage analysis for the system, a move that could support Medicare beneficiary access to the treatment. This development is viewed as a positive step towards establishing a national Medicare coverage policy for renal denervation procedures. Citi analyst Joanna Wuensch maintained a Neutral rating on Medtronic, noting that 1% penetration of the target segment could represent over $1B in revenue.

Meanwhile, Mizuho (NYSE:MFG) Securities upgraded Medtronic’s share price target to $100 from $98, maintaining an Outperform rating. The adjustment reflects the firm’s positive outlook on Medtronic’s advancements, particularly in the renal denervation space. RBC Capital Markets also showed optimism for Medtronic, highlighting it as a stock with significant upside potential in the Medical (TASE:PMCN) Supplies & Devices sector.

Barclays (LON:BARC), on the other hand, maintained its Overweight rating on Medtronic and increased its price target to $109 from the previous $105. The firm expects Medtronic to experience accelerating earnings per share growth in the latter half of fiscal year 2025. These are some of the recent developments for Medtronic.

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