Medtronic Remains Neutral - Analyst Blog

We recently reiterated our ‘Neutral’ recommendation for Medtronic, Inc. (MDT) with a target price of $47 based on a P/E of roughly 13.4x our fiscal 2011 EPS estimate of $3.52.

Medtronic reported third quarter fiscal 2010 earnings per share of 77 cents, surpassing the Zacks Consensus Estimate of 76 cents and the year-ago earnings of 71 cents.

Total revenues in the third quarter increased 10% year over year to $3.851 billion. Medtronic witnessed sales growth across all its seven business segments.

Cardiac Rhythm Disease Management (CRDM) revenues increased 6% year over year to $1.243 billion, driven by strong demand for implantable cardioverter defibrillators (ICDs). Spinal revenues increased 1% year over year to $842 million. Growth was fueled by higher demand for Biologics products.

CardioVascular revenues increased 28% year over year to $722 million. The increase in revenues can be attributed to strong sales growth across the company’s Coronary, Structural Heart Disease and Endovascular segments.

Neuromodulation revenues increased 11% year over year to $394 million, primarily due to higher sales of Activa PC, RC Deep Brain Stimulation systems and InterStim Therapy products.

Diabetes, Surgical Technologies and Physio-Control revenues increased 12%, 15% and 11% year over year to $311 million, $239 million and $100 million, respectively.

Medtronic also raised the lower end of its previously issued earnings per share guidance for fiscal 2010. For the year, earnings per share are expected in the range of $3.20 to $3.22, compared to the prior guidance of $3.17 to $3.22.

Medtronic is one of the world’s leading medical technology companies, specializing in implantable and interventional therapy devices and products. The company’s main competitors include St. Jude Medical (STJ) and Boston Scientific Corporation (BSX).