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On Wednesday, Goldman Sachs reiterated its Sell rating on Medtronic , Inc. (NYSE:MDT) stock, with a steady price target of $82.00. The firm's analyst cited a revision of their model based on recent business performance, market outlooks, competitive positioning, and profit and loss assumptions.
For the fiscal year 2025, projections fell slightly below the company's EBIT margin targets. This was attributed to continuous growth in operating expenses and uncertainties in other operating income and expenses, which include factors like the Puerto Rico excise tax and foreign exchange hedging results.
Medtronic's anticipated earnings per share (EPS) in FY25 are $5.44, which is narrowly under the company's updated guidance range of $5.42 to $5.50.
The revision in EPS is mainly due to a lower projected share count, while net income estimates decreased because of reduced other operating income and a slightly increased tax rate.
Looking ahead to FY26 and beyond, most of the EPS revisions are again attributed to a reduced share count, with other operating factors balancing out at the net income level.
Despite acknowledging Medtronic's progress in various areas, the analyst remains cautious about the company's revenue and EPS growth outlook, estimated at 4-5% and 6-7%, respectively.
The firm's stance on the stock's future hinges on Medtronic's ability to demonstrate sustained growth in established franchises, contributions from new product updates, and reduced reliance on share repurchases to fuel EPS growth. These factors are considered key to improving the company's stock outlook.
InvestingPro Insights
In light of Goldman Sachs' Sell rating on Medtronic, Inc. (NYSE:MDT), it's worth considering additional insights from InvestingPro. Medtronic has displayed a commitment to returning value to shareholders, as evidenced by a decade-long streak of dividend increases. This is a positive signal for investors looking for stable income, as the company has raised its dividend for 10 consecutive years. Moreover, the management's aggressive share buyback strategy could be a factor in the reduced share count impacting future earnings per share (EPS) projections.
InvestingPro data highlights a solid market capitalization of $109.51 billion and a Price/Earnings (P/E) ratio of 28.57, suggesting that investors are willing to pay a premium for the company's earnings. The company's revenue growth over the last twelve months stands at 3.64%, which, while modest, indicates a degree of resilience in its business operations. Additionally, with a dividend yield of 3.28% and a history of maintaining dividend payments for an impressive 48 consecutive years, Medtronic presents itself as a potentially attractive option for dividend-seeking investors.
For those interested in a deeper dive into Medtronic's financial health and future outlook, InvestingPro offers additional tips and data metrics. Subscribers can access a comprehensive list of insights, including information on the stock's volatility, industry positioning, and analysts' profitability predictions for the year, by visiting https://www.investing.com/pro/MDT.
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