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On Wednesday, UBS analyst Danielle Antalffy adjusted the price target for Medtronic , Inc. (NYSE:MDT) stock, raising it to $95 from the previous target of $85 while maintaining a Neutral rating on the shares. The revision reflects a view that the recent weakness in Medtronic’s share price may be overstated, considering the market’s concerns about the company’s future financial guidance. The $110.8 billion healthcare equipment giant maintains a "GOOD" overall financial health score according to InvestingPro analysis, with particularly strong marks in profitability and cash flow metrics.
Medtronic has faced skepticism due to the Medical (TASE:PMCN) Surgical business’s performance, which represents about 25% of total sales and has missed revenue expectations for the last three quarters. However, Medtronic’s Investor Relations highlighted the company’s Long Range Plan (LRP) of mid-single-digit top-line growth and a faster bottom-line growth when addressing the financial year 2026 outlook. The company’s current revenue growth of 2.72% and impressive dividend track record - having maintained payments for 48 consecutive years with a current yield of 3.25% - demonstrate its financial stability despite near-term challenges.
Antalffy noted that despite the Medical Surgical segment’s underperformance, Medtronic’s overall organic sales growth was closer to the 5% target of the LRP when excluding the impact of Medical Surgical distributor issues. The UBS analyst also pointed out the positive momentum in Medtronic’s Diabetes sector and growing momentum in Cardiac Ablation Solutions, driven by the adoption of Pulsed Field Ablation (PFA).
The report further mentioned that the current consensus estimates for the financial year 2026 appear reasonable, even without significant contributions from the upcoming launches of Hugo surgical robotic and Symplicity RDN (Renal Denervation) systems. These new products are not expected to contribute substantially to the fiscal year 2026 estimates.
While recognizing the potential for a continued turnaround in the Diabetes business and a path to sustainable mid-single-digit sales growth for Medtronic, UBS’s Neutral stance remains in place. The firm is looking for more clarity on potential sources of sales upside and whether there is greater leverage potential than currently modeled, regardless of sales growth outcomes. According to InvestingPro analysis, the stock appears slightly undervalued at current levels, with analyst targets ranging from $83 to $112. Subscribers can access 8 additional ProTips and comprehensive financial metrics through the platform’s detailed research reports.
In other recent news, Medtronic, Inc. reported its third-quarter fiscal year 2025 results, revealing an adjusted earnings per share (EPS) of $1.39, which exceeded analyst expectations of $1.36. However, the company’s revenue fell short of forecasts, coming in at $8.29 billion compared to the anticipated $8.33 billion. This revenue miss was attributed in part to a decline in the Surgical Innovations division, which experienced a 0.4% year-over-year decrease due to distributor de-stocking. Despite this, Medtronic remains optimistic, viewing the de-stocking as a one-time event and maintaining confidence in the underlying demand for its products.
Additionally, Medtronic’s organic revenue growth was reported at 4.1%, slightly below the approximately 4.8% projected by analysts. The company highlighted strong growth in international markets, particularly in Japan, and significant advancements in product innovation, especially in the Cardiac Ablation and Diabetes segments. Stifel analysts have maintained a Hold rating on Medtronic’s stock with a price target of $87, reflecting a cautious stance given the recent earnings performance and outlook. Medtronic’s management continues to express confidence in the company’s core business strength and anticipates that the effects of the distributor de-stocking will not have a long-term impact on growth.
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