Medtronic (NYSE: MDT) is set to announce its fiscal 2024 fourth-quarter results on May 23, with expectations that its revenues and earnings will meet street estimates. The company is expected to benefit from increased procedures volume and the expansion of new products, leading to potential growth in its stock. Despite recent declines in stock performance, there is room for growth, with its current levels around $85 likely to see improvement in the coming months.
In recent years, Medtronic’s stock has underperformed the market, with negative returns in 2021 and 2022, only seeing a slight increase in 2023. This trend aligns with other heavyweights in the Health Care sector and megacap stars like Google and Microsoft. However, the Trefis High Quality Portfolio has consistently outperformed the S&P 500 each year, showing better returns with less risk. With ongoing macroeconomic uncertainties, including high oil prices and elevated interest rates, the question remains whether Medtronic will continue to underperform or see a recovery in the next 12 months.
From a valuation perspective, Medtronic is estimated to have room for growth, with a projected valuation of $96 per share, reflecting a potential upside of over 10%. The current trading multiple of 17x expected earnings for 2024 is lower than the 20x average over the last three years. In the previous quarter, Medtronic’s revenue saw growth, driven by higher sales of its MiniMed 780G systems. The company’s adjusted operating margin slightly declined, resulting in a bottom line that was in line with the previous year.
Looking ahead to the upcoming quarter, Medtronic is expected to see continued growth in segments such as Diabetes and Cardiovascular. Organic sales growth is anticipated to be driven by relatively new products like the Micra AV pacemaker and the MiniMed 680G insulin system. The company expects organic sales to increase between 4.75% and 5% from the previous fiscal year. The bottom line is forecasted to be in the range of $5.19 to $5.21 on an adjusted basis.
While Medtronic’s stock has potential for growth, it is important to consider how the company’s peers are performing in comparison. By analyzing metrics that matter, investors can gain valuable insights into the overall industry landscape and make informed decisions. As the company prepares to announce its fourth-quarter results, investors will be watching closely to see if Medtronic can meet expectations and continue its growth trajectory in the coming months.
