Medtronic Stock Breaks Out on Earning Beat, Hits New All-Time High

Medtronic PLC Breaks Out, Hitting New All-Time High on Earnings BeatMedtronic PLC up 27% in 2019, But 2020 Looks More Bullish

Medtronic PLC (NYSE:MDT) is a tech stock we’ve been paying close attention to.

First, the company’s medical equipment is helping tackle America’s opioid addiction, an epidemic that has resulted in hundreds of thousands of deaths. From 2015 to 2018, the epidemic also cost the U.S. economy more than $2.5 trillion. The deaths and financial toll continue to rise. (Source: “White House: the opioid epidemic cost $2.5 trillion over 4 years,” Vox, November 1, 2019.)

Second, thanks to Medtronic’s diversified portfolio of first-to-market products and its growing footprint, it continues to report strong financial results. This has helped catapult Medtronic stock considerably higher over the last number of years.

And the future looks even brighter.

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Thanks to the strong first half of fiscal 2020 (ended October 25, 2019), management said that it was “even more excited about what lays ahead, as investments in our pipeline begin to pay off by accelerating revenue growth and creating value for shareholders.” (Source: “Medtronic Reports Second Quarter Financial Results,” Medtronic PLC, November 19.)

MDT Stock Overview

Medtronic stock isn’t exactly an under-the-radar stock; it’s the world’s largest medical device company.

The Dublin, Ireland-based medical device company operates in four segments: “Cardiac and Vascular Group” (fiscal 2019 sales of $11.5 billion); “Minimally Invasive Therapies Group” ($8.5 billion); “Diabetes Group” ($2.4 billion); and “Restorative Therapies Group” ($8.2 billion). (Source: “Facts and Statistics,” Medtronic PLC, last accessed November 20, 2019.)

Sales of products for the heart, pain relief, and minimally invasive surgery make up more than 90% of Medtronic’s revenues.

The company’s “Pain Therapies” subgroup is within the Restorative Therapies Group. It treats chronic pain, which affects 100 million Americans. The company’s pain therapies can replace addictive pills, including opioids.

An even bigger market is held by its “Diabetes Group.” More than 400 million people around the world are affected by diabetes. Many of those people need to monitor their blood sugar levels and inject insulin.

Medtronic’s “MiniMed” insulin pump delivers insulin and its “Guardian” glucose monitors and transmits blood-sugar level data.

Despite reporting decent second-quarter growth, the Diabetes Group continues to face stiff competition. That said, management said reinvigorating the group is a top priority.

MDT Stock Information

Market Cap $149.5 Billion
52-Week Change 20.52%
52-Week High $114.46
52-Week Low $81.66
Shares Outstanding 1.34 Billion
Float 1.34 Billion
50-Day Moving Average $107.61
200-Day Moving Average $102.16

(Source: “Medtronic plc (MDT),” Yahoo! Finance, last accessed November 20, 2019.)

What’s not to love about the below stock chart?

Medtronic stock has been rewarding buy-and-hold investors for years now. Since 2012, MDT stock has advanced 240%. More recently, since 2018, the company’s share price has increased 37%. So far in 2019, it’s up 27%.

Chart courtesy of StockCharts.com

Again, thanks to strong sales and the launch of new products over the coming quarters, Medtronic stock should continue to reward long-term investors.

Its “Micra AV” dual-chambers pacemaker is projected to launch in the U.S. in early 2020.

Other upcoming product launches include a new automated insulin pump, a new cardiac monitor, and neurostimulation devices for the brain and spinal cord.

Strong Q2 Results Top Wall Street Forecasts

On November 19, Medtronic announced its financial results for the second quarter of fiscal 2020 ended October 25, 2019.

Second-quarter revenue increased three percent year-over-year to $7.7 billion. U.S. revenue, which accounts for 54% of the company’s revenue, advanced 2.1% in the second quarter to $4.1 billion.  (Source: Medtronic PLC, November 19, op. cit.)

Revenue from the Cardiac and Vascular Group slipped by a modest 0.1%; revenue from the Minimally Invasive Therapies Group advanced 4.6% year-over-year to $2.1 billion; revenue from the Restorative Therapies Group increased six percent, also to $2.1 billion; and Diabetes Group revenue was up 2.2% at $596.0 million.

Medtronic reported second-quarter net income of $1.4 billion, or $1.01 per share, a 22% increase from the $1.1 billion, or $0.82 per share, in the same period last year. Adjusted net income came in at $1.31 per share; analysts were looking for adjusted earnings per share of $1.28.

Medtronic Raises Full-Year Adjusted Earnings Guidance

Medtronic reiterated its full-year revenue guidance and raised its earnings-per-share outlook.

Sales for 2020 are projected to grow approximately four percent, accelerating in the second half of fiscal 2020.

But the company raised its fiscal 2020 adjusted earnings guidance from the prior-range of $5.54 to $5.60 to a new range of $5.57 to $5.63. Wall Street was looking for full-year 2020 adjusted earnings of $5.56 per share.

Analyst Take

Medtronic PLC is a medical technology juggernaut that continues to impress. And it should continue to do so. The company reported strong second-quarter results and raised its full-year adjusted earnings guidance.

Over the coming quarters, Medtronic is expected to launch a number of new products, which should drive revenue growth and boost Medtronic stock.