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On Thursday, Medtronic , Inc. (NYSE:MDT) stock received an upgrade in its rating by a UBS analyst from Sell to Neutral. The firm also increased its price target for the company's shares from $76.00 to $90.00. The revision is attributed to a renewed confidence in the sustainability of Medtronic's recent turnaround in its Diabetes business segment.
The Diabetes division, which accounts for nearly 10% of Medtronic's sales, has been identified as a key driver for the company's revenue growth. The analyst's improved outlook on this segment led to an increase in the fiscal year 2026 and 2027 sales and earnings per share (EPS) estimates. Specifically, there is an anticipated increase of 60 basis points in sales and 120 basis points in EPS for both fiscal years.
The upgrade reflects the belief that the company's performance in the Diabetes market could help balance potential weaknesses in other areas of the business, such as Surgical and Cardiac Ablation Solutions. The analyst's expectations for Medtronic's sales growth stand at approximately 4% in fiscal year 2026, which aligns with investor forecasts and is slightly below the consensus estimate of around 5%.
The positive shift in Medtronic's stock rating and the rise in the price target come as a result of the detailed analysis of the company's growth prospects, particularly in the Diabetes sector. The UBS analyst's comments underscore the importance of this segment to Medtronic's overall financial health and growth trajectory.
InvestingPro Insights
Following the UBS analyst's upgrade of Medtronic, Inc. (NYSE:MDT), the InvestingPro platform offers additional insights that could be pertinent for investors considering the company's stock. With a solid market capitalization of $104.84 billion and a P/E ratio standing at 21.96 for the last twelve months as of Q4 2024, Medtronic appears to be maintaining a stable financial position. The company's revenue growth over the same period is modest at 3.64%, reflecting a consistent upward trend.
InvestingPro Tips highlight that Medtronic has been actively engaging in share buybacks, which could be a sign of management's confidence in the company's value. Additionally, the company's longstanding history of dividend payments, with dividends raised for 10 consecutive years and maintained for 48 years, offers investors a degree of reliability in terms of shareholder returns. Furthermore, Medtronic's low price volatility may appeal to investors seeking stability in their portfolios.
For those interested in a deeper analysis, InvestingPro provides several more tips that could guide investment decisions. To explore these additional insights, visit https://www.investing.com/pro/MDT.
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