On Wednesday, UBS has adjusted its price target for Medtronic , Inc. (NYSE:MDT), a global leader in medical technology, services, and solutions, increasing it to $93.00 from the previous $90.00. Despite the change, the firm has decided to maintain a Neutral rating on the company's stock.
The revision follows Medtronic's second fiscal quarter of 2025 performance, which showed organic sales growth slightly surpassing consensus expectations by approximately 0.5%, contributing to a modest earnings per share (EPS) increase of about $0.01.
According to the analyst from UBS, the quarter was largely in line with what buy-side expectations might have been, even though investors might have anticipated greater positive leverage from the sales beat.
Medtronic has reported its eighth consecutive quarter of mid-single-digit organic sales growth, a trend that UBS suggests should be the focal point rather than the current extent of leverage. This consistent growth is viewed as a foundational step towards improving leverage over time.
The firm's confidence in Medtronic's growth trajectory is further bolstered by ongoing momentum in the Diabetes segment and the anticipation of new product cycles. Among the upcoming products, Affera in Cardiac Ablation Solutions stands out as a significant release.
UBS believes that these factors contribute to a solid foundation for Medtronic, with the expectation that positive leverage will continue to improve as new products are launched.
In other recent news, Medtronic has reported positive financial results for the second quarter of fiscal year 2025, surpassing consensus estimates for both revenue and earnings per share. This led the company to raise its full-year 2025 revenue and EPS guidance.
However, the company experienced a slight deceleration in organic growth, with a 5.0% increase in F2Q25 compared to 5.3% in the first quarter, attributed to new product launches and improvements in the Diabetes segment.
In the realm of mergers and approvals, Medtronic received FDA approval for its advanced Affera Mapping and Ablation System with Sphere-9 Catheter, designed for the treatment of persistent atrial fibrillation and cavotricuspid isthmus dependent atrial flutter. The company also initiated a voluntary field action for its MiniMed™ 600 and 700 series insulin pumps due to potential battery issues.
RBC Capital Markets upgraded Medtronic's rating from Sector Perform to Outperform, citing improved business fundamentals and management's execution capabilities. However, Goldman Sachs (NYSE:GS) maintained a Sell rating, pointing to continuous growth in operating expenses.
Additionally, Baird anticipates that Medtronic's second quarter fiscal year 2025 revenue and adjusted earnings per share will surpass consensus expectations. These are all recent developments in Medtronic's journey.
InvestingPro Insights
To complement UBS's analysis of Medtronic, Inc. (NYSE:MDT), InvestingPro data offers additional context to the company's financial health and market position. Medtronic's market capitalization stands at $109.01 billion, reflecting its significant presence in the Healthcare Equipment & Supplies industry. The company's revenue for the last twelve months reached $33.0 billion, with a modest growth of 3.25%, aligning with UBS's observation of consistent mid-single-digit organic sales growth.
InvestingPro Tips highlight Medtronic's strong dividend history, having maintained dividend payments for 48 consecutive years and raised them for 10 consecutive years. This track record underscores the company's financial stability and commitment to shareholder returns, which may be particularly appealing to income-focused investors in the current market environment.
Moreover, Medtronic's gross profit margin of 65.43% for the last twelve months indicates a robust ability to generate profit from its core business operations. This profitability, coupled with the company's consistent dividend policy, supports UBS's view of Medtronic as a solid investment with potential for improved leverage over time.
For investors seeking a deeper understanding of Medtronic's financial outlook, InvestingPro offers 10 additional tips, providing a comprehensive analysis to inform investment decisions.
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