Medtronic (MDT) beats Q3 projections, raises FY24 outlook

Medtronic, a global medical technology company, reported Q3 (Jan) earnings, surpassing analyst expectations for both the top and bottom line. The results led the company to raise its full year outlook as it heads into the final quarter of its fiscal year. However, the raised guidance reflects the Q3 performance rather than an improved outlook for the company which is why the stock price is seeing a relatively muted 1.30% rise on the session. 

The company posted earnings of $1.41 per share, excluding non-recurring items, exceeding consensus of $1.26. Revenues also saw an increase of 4.7% year-over-year, reaching $8.09 billion, compared to the consensus of $7.95 billion.

Medtronic's Cardiovascular Portfolio, which includes the Cardiac Rhythm & Heart Failure, Structural Heart & Aortic, and Coronary & Peripheral Vascular divisions, reported revenue growth of 6.1% as reported and 5.1% organically. Meanwhile, the Neuroscience Portfolio, consisting of Cranial & Spinal Technologies, Specialty Therapies, and Neuromodulation divisions, achieved a 4.8% increase in revenue. Additionally, the Medical Surgical Portfolio, encompassing the Surgical & Endoscopy and Patient Monitoring & Respiratory Interventions divisions, saw a 3.9% rise in revenue.

The earnings report highlighted Medtronic's fifth consecutive quarter of solid mid-single-digit growth. One of the key drivers of this growth is the company's diabetes business, which saw double-digit growth. Additionally, Medtronic noted a return to growth in China, with strong double-digit growth in the region during the quarter, indicating a positive outlook for the future.

From a portfolio perspective, Medtronic has expressed its focus on tuck-in acquisitions rather than transformational M&A deals. This strategic approach aligns with their goal of maintaining a steady growth trajectory.

While the company acknowledged that GLP-1 drugs have had short-term impact on their business due to the slowdown in bariatric surgeries, they do not foresee weight-loss drugs significantly impacting their business in the medium or long term. This provides further reassurance regarding the stability and growth potential of Medtronic's operations.

Looking ahead, Medtronic is optimistic about its prospects, as evidenced by the guidance it provided for FY24. The company raised its organic revenue growth forecast and EPS guidance for FY24. They now expect organic revenue growth in the range of 4.75% to 5%, up from the previous estimate of 4.75%. Furthermore, Medtronic raised its diluted non-GAAP EPS guidance from the prior range of $5.13 to $5.19 to the new range of $5.19 to $5.21.

Notably, Medtronic recently received U.S. FDA approval for its PulseSelect pulsed field ablation (PFA) system and Percept RC neurostimulator with BrainSense technology. They also obtained the CE Mark for the MiniMed 780G System with Simplera Sync CGM and the Micra AV2 and Micra VR2 leadless pacemakers. These regulatory achievements reflect Medtronic's commitment to innovation and expansion in its product offerings.

Overall, Medtronic's Q3 earnings report indicates a robust growth potential and investment value. The company's focus on diabetes and international markets, coupled with its consistent revenue growth across various portfolios, further strengthens this outlook. With its optimistic guidance for FY24 and ongoing innovative developments, Medtronic is well-positioned for continued success in the medical technology sector.

Please note that the information provided here is based solely on the information presented and is not an endorsement of Medtronic or an investment recommendation.

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