Reasons to Retain Medtronic Stock in Your Portfolio Now

Medtronic plc’s MDT strength in the Cardiovascular business is poised to drive growth in the upcoming quarters. The company’s Neuroscience portfolio's growth prospects look highly promising. Meanwhile, headwinds from a dull macroeconomic environment leading to profit shrinkage pose a challenge to Medtronic’s operations. Adverse currency fluctuations add to the worry.In the past year, this Zacks Rank #3 (Hold) company’s shares have lost 4.4% against the industry’s 9.7% growth. The S&P 500 composite has witnessed a 26.7% increase in the same time frame.The renowned medical device company has a market capitalization of $110.62 billion. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 1.99%.Let’s delve deeper.Medtronic’s Key UpsidesContinuous Market Share Gain Within Cardiovascular: Medtronic is expanding its global foothold within its Cardiovascular business. Within Cardiovascular, cardiac rhythm management continued to build on the company’s category leadership banking on strong performances of Defibrillation Solutions and cardiac pacing therapies. The company’s next-generation Micra AV2and VR2 leadless pacemakers are particularly driving growth as they successfully enter new geographies and expand penetration in existing markets. In the fiscal second quarter, the Structural Heart business saw strong, high single-digit growth. Within Structural Heart, the company looks forward to market share gain on robust Transcatheter aortic valve replacement (TAVR) prospects. Neuroscience Portfolio Shows Strong Growth Prospects: Within Medtronic’s Neuroscience portfolio, the Cranial & Spinal technologies business has been registering strong growth in recent quarters. The continued adoption of the AiBLE ecosystem led to strong 6% growth within the Cranial & Spinal technologies business in the fiscal second quarter. According to Medtronic, AiBLE's differentiated features and the sheer scale around the world make it a winning formula for the Spine business. In Neuromodulation, the company is gaining new implant shares in both pain Stim and Deep Brain Stimulation. In pain stim, the market is gaining from the continued launch of the Inceptiv closed-loop spinal cord stimulator. In brain stim, Percept RC with BrainSense is registering strong sales.Medtronic’s Key DownsidesGross Profit Margin Continues to Shrink: Medtronic is currently affected by the industry-wide increase in costs and expenses stemming from geopolitical concerns. The continued elevation in raw material and labor costs, as well as the oil price volatility, are denting the company’s profit. Further, high interest rate leading to increasing borrowing costs is concerning. In the second quarter of fiscal 2025, gross margin contracted 48 basis points to 64.9% on a 6.7% rise in the cost of revenues. Selling, general and administrative expenses rose 2.6% year over year. Image Source: Zacks Investment ResearchExposure to Currency Movement: With Medtronic recording a significant portion of its sales from the international market, it remains highly exposed to currency fluctuations. Unfavorable currency movements have been a major dampener over the previous few quarters, as in the case of other important MedTech players. In the fiscal second quarter, the company recognized an unfavorable impact of 9 cents from foreign currency translation on its adjusted earnings per share.MDT’s Estimate TrendThe Zacks Consensus Estimate for fiscal 2025 earnings has remained unchanged at $5.45 per share in the past 30 days.The consensus estimate for fiscal 2025 revenues is pegged at $33.56 billion, which indicates a 3.7% increase from the year-ago reported number.Key PicksSome better-ranked stocks in the broader medical space are Omnicell OMCL, Penumbra PEN and ResMed RMD.Omnicell has an earnings yield of 3.7% compared to the industry’s 9.5%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 121.74%. OMCL’s shares have risen 15.2% against the industry’s 16.8% decline in the past year.OMCL carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Penumbra, carrying a Zacks Rank #2 (Buy) at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have lost 5.3% against the industry’s 5.3% growth in the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.ResMed, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 8.9% for fiscal 2025. Its shares have surged 33.4% compared with the industry’s 11.1% growth in the past year. RMD’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.41%. Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Medtronic PLC (MDT): Free Stock Analysis Report Omnicell, Inc. (OMCL): Free Stock Analysis Report ResMed Inc. (RMD): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks