On Wednesday, Baird made an adjustment to its outlook on Medtronic , Inc. (NYSE:MDT) shares, a global leader in medical technology services and solutions, by lowering the company's price target from $96.00 to $93.00. Despite this reduction, Baird maintained a Neutral rating on the stock.
The firm's analyst cited Medtronic's consistent performance, noting its eighth consecutive quarter of mid-single-digit (MSD) revenue growth and another quarter where earnings per share (EPS) exceeded expectations, with operating margin (OM) results meeting predictions.
Looking forward to the fiscal year 2025, the analyst expects stable MSD revenue growth, bolstered by the introduction of new products such as PFA, 780/Simplera, EV-ICD, and Hugo.
The analyst also acknowledged the positive indication of high single-digit (HSD) EPS growth rate as the fiscal year 2025 comes to a close. However, the analysis anticipates challenges for Medtronic moving into fiscal year 2026.
The company is expected to face ongoing foreign exchange (FX) pressures, potentially dilutive effects from new product launches and capital rollouts, as well as a slight tax headwind. These factors are believed to be likely to hinder a sustainable return to HSD EPS growth.
The report concluded that until there is clearer visibility into the stabilization of margins and reacceleration of EPS, Baird prefers to maintain a cautious stance on the stock. The firm's position reflects a watchful approach to Medtronic's financial trajectory as it navigates the complexities of product rollouts and market conditions in the coming fiscal year.
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. The company also 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.
Moreover, 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.
On the analyst front, RBC (TSX:RY) 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. Meanwhile, Needham reiterated a Hold rating on Medtronic, reflecting the company's steady performance amidst external pressures. These are all recent developments in Medtronic's journey.
InvestingPro Insights
To complement Baird's analysis of Medtronic, Inc. (NYSE:MDT), recent data from InvestingPro offers additional context for investors. Medtronic's market capitalization stands at $109.01 billion, reflecting its significant presence in the Healthcare Equipment & Supplies industry. The company's P/E ratio of 26.82 suggests a premium valuation, which aligns with Baird's cautious stance.
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 of consistent shareholder returns could be appealing to income-focused investors, especially given the current dividend yield of 3.29%.
However, it's worth noting that 10 analysts have revised their earnings downwards for the upcoming period, which may support Baird's concerns about future growth challenges. Despite these revisions, Medtronic remains profitable, with a gross profit margin of 65.41% for the last twelve months as of Q2 2025.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could further inform investment decisions regarding Medtronic. Currently, there are 5 more InvestingPro Tips available for MDT, providing a broader perspective on the company's financial health and market position.
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