Analyst Note| Debbie S. Wang |
Medtronic posted fiscal third-quarter results that slightly exceeded our expectations on the top line and met our bottom-line projections, which has not materially shifted our fair value estimate. The firm remains on track to meet our full-year projections, and we still anticipate further improvement in procedure volume as vaccines are rolled out. Compared with key competitors, Medtronic weathered the latest resurgence of COVID-19 relatively well, supported by the firm’s robust pipeline of new product launches. We saw evidence of Medtronic’s wide economic moat in the quarter, as the firm’s waxing product cycles more than offset those that are waning. For example, the Medtronic’s leadless pacemaker continues to see strong adoption, and we expect this will continue thanks to the Micra AV product, which enlarges the potential patient pool to more than 50% of pacemaker patients. As a result of this product strength, Medtronic’s cardiac rhythm management and heart failure segment outpaced rival Boston Scientific’s CRM business in the latest quarter.