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This Medical Stock Just Retook Its Buy Point On Its Unexpected Earnings Beat

Medtronic stock inched higher Tuesday after the medical technology giant beat Wall Street’s quarterly profit estimates, but sales were just in line on the continued pandemic impact.




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For the fiscal third quarter ended Jan. 29, Medtronic (MDT) reported adjusted earnings of $1.29 a share on $7.775 billion in sales.

Earnings declined 10%, but that was better than FactSet’s call for $1.15 per share. Sales grew 0.8% on a strict as-reported basis. Organically, sales ticked down 1%. That adjusts for a $136 million foreign currency benefit.

Relative to forecasts, Medtronic’s earnings were “solid,” Edward Jones analyst Ashtyn Evans said in a report to clients. She kept her buy rating on Medtronic stock.

“Medtronic continues to be impacted by lower procedure volumes as result of the pandemic,” she said. “This is a temporary impact, and volumes are expected to steadily improve from here. We expect year-over-year growth to be strong from here, given the depressed sales base.”

Medtronic Stock Inches Higher

On the stock market today, Medtronic stock edged 1.9% higher to 118. Medtronic stock broke out of a flat base with a buy point at 116.31 on Dec. 18, according to MarketSmith.com. Shares had floated into and out of the 5% chase zone and, on Tuesday, rose definitely into the buy zone.

Evercore ISI analyst Vijay Kumar noted a key theme of share gains for Medtronic. Sales in the company’s neuromodulation, pelvic health and transcatheter aortic heart valve replacement businesses increased. Micra pacemaker sales also grew, he said.

“The other highlight for us was diabetes growing low single-digit,” he said. “Clearly the 780G (automated insulin delivery system) launch is going very well.”

More bearish for Medtronic stock, total cardiac rhythm management sales declined by a mid single-digit. That was in line with similar dips for Abbott Laboratories (ABT) and Boston Scientific (BSX), Kumar said.

Medtronic didn’t give guidance, however. The company cited uncertainty due to the pandemic. Analysts called for full-year Medtronic earnings per share of $4.59 and $28.91 billion in sales.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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