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Medtronic PLC MDT

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Medtronic Begins Fiscal 2022 in Solid Fashion; No Change to Our Fair Value Estimate

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

Medtronic got off to a solid start in fiscal first quarter that featured a nice recovery from the relatively weak prior-year period. We’re holding steady on our fair value estimate as these early results are generally consistent with our full-year projections. Medtronic’s atypical fiscal quarter timing, which includes July, provides a better peek into how the rise of the Delta variant has damped procedure volume growth as the summer unfolded. Thus far, it appears the effect has been felt most strongly in certain U.S. geographies that have been characterized by low vaccination rates but has had a modest impact on the firm overall. Management expects this pandemic pressure on volume to peak in September, and we concur based on how the Delta variant has played out in the U.K. and India. Despite these near-term speedbumps, we remain confident in Medtronic’s wide economic moat. We were pleased to see R&D investment accelerate in first quarter, which should continue through the second quarter. Medtronic’s ability to increase R&D spending at this scale allows it to support significant pipeline programs that reinforce the wide moat and which we expect will drive future growth, including renal denervation and extravascular implantable cardioverter defibrillators.

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Company Profile

Business Description

One of the largest medical device companies, Medtronic develops and manufactures therapeutic medical devices for chronic diseases. Its portfolio includes pacemakers, defibrillators, heart valves, stents, insulin pumps, spinal fixation devices, neurovascular products, advanced energy, and surgical tools. The company markets its products to healthcare institutions and physicians in the United States and overseas. Foreign sales account for almost 50% of the company's total sales.

Lower Hatch Street, 20 On Hatch
Dublin, 2, Ireland
T +353 14381700
Sector Healthcare
Industry Medical Devices
Most Recent Earnings Jul 31, 2021
Fiscal Year End Apr 30, 2022
Stock Type
Employees 90,000