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Earnings preview: Medtronic could benefit from innovation, global expansion in Q3

Medical technology company Medtronic (MDT) will be reporting financial results for the third quarter Tuesday before the market opens. Analysts’ consensus earnings estimate for the quarter is $1.23 per share – after a couple of downward revisions – which represents a year-on-year growth. Revenues are seen rising by 2.5% to $7.55 billion.

Medtronic second quarter 2019 Earnings Infographic
Medtronic plc Q2 2019 Earnings Infographic

A post-earnings rally is in the cards, considering the stock’s tendency to make sharp moves after quarterly reports and the strong probability of a beat this time. That is in line with the positive recommendations on the stock, ranging from outperform to strong buy. Meanwhile, the price targets set by market watchers, representing a double-digit increase from the current levels, indicate solid long-term gains.

The upbeat outlook for the Dublin, Ireland-based firm can also be attributed to the effective implementation of strategies. In the to-be-reported quarter, the key growth drivers will be innovations in therapy and the company’s growing global footprint. These factors, combined with the economic value and the aging population, could help Medtronic sustain the momentum in the long term.

The price targets set by market watchers, representing a double-digit increase from the current levels, indicate solid long-term gains

Technological innovation in the Cardiac and Vascular Group has brought technically advanced products in the market, such as ventricular assist devices, insertable diagnostics and new-generation pacemakers, which are currently in high demand. It is a similar scenario in the diabetes department, with Medtronic’s revamped hybrid closed-loop insulin delivery system gaining popularity across all markets.

Riding on the stellar performance by its key business segments, Medtronic reported a 14% growth in second-quarter earnings to $1.22 per share. Reflecting the strong organic sales performance, revenues jumped 6% to $7.48 billion. The results exceeded the estimates.

Related: Medtronic stock gains on strong Q2 results

Earlier this week, the company entered into a healthcare partnership with the Medical University of South Carolina, one of the prominent medical schools in the US, to offer better care to patients in South Carolina. The five-year value-based partnership will also focus on reducing medical care costs.

After reaching a peak in September last year, Medtronic shares pulled back in the following months. Having started 2019 on a positive note, the stock has gained more than 4% so far this year.

 

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