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On Wednesday, Deutsche Bank maintained its Hold rating on Medtronic , Inc. (NYSE:MDT) stock, with a consistent price target of $85.00.
Following the company's financial report, the firm's analysis noted that Medtronic had outperformed the broader market earlier in the day. However, the performance did not meet some shareholder expectations for a more significant rise after the company's earnings beat and updated guidance.
The report highlighted that Medtronic's stock is currently trading at 14.6 times the forecasted fiscal year 2026 earnings per share (EPS) of $5.82. This valuation positions Medtronic as one of the value stocks within the medical technology sector.
Value stocks typically show less robust performance compared to growth stocks, primarily because they often exhibit lower operating leverage on revenue growth, which can result in a wider gap in EPS growth between value and growth stocks.
Despite Medtronic's recent financial achievements, the firm pointed out that the updated guidance provided by the company was roughly equivalent to the first quarter's earnings beat. Consequently, this alignment suggests that the EPS estimates for 2026 may not see a significant upward revision.
For Medtronic's stock to gain momentum, the firm suggests that a more substantial beat and raise pattern is necessary, where future financial projections are adjusted upward, potentially leading to an expansion of the stock's multiple.
The analysis recognized that Medtronic's conservative approach to guidance is understandable, given its new chief financial officer (CFO) and its early fiscal year.
However, it was also noted that such conservative guidance typically does not lead to dramatic stock price movements for value stocks. As a result, Deutsche Bank reiterated both its Hold rating and the $85.00 price target for Medtronic.
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