MDT - Medtronic: Its Recent Beat Proves That It Continues To Be A Rock
2024-02-25 09:38:23 ET
Summary
- Thesis & Performance: Previous analysis suggested a fair price of $137.6; Q3 2024 earnings beat estimates, affirming my "strong buy" recommendation.
- Financial Overview: Q3 2024 earnings reported revenue of $8.1B and EPS of $1.30, surpassing estimates, with steady growth in net income despite segment year-to-date underperformance.
- Two valuation models presented: analyst estimates suggests a $178.12 fair price (107.5% upside), meanwhile the conservative model projects a $126.09 fair price (46.9% upside).
- Risks & Conclusion: I acknowledge the risks concerning EPS revisions and market sentiment, nevertheless I maintain my "strong buy" rating, expecting significant upside even if Medtronic maintains current growth rates.
Thesis
In my previous article about Medtronic plc ( MDT ), released in I assigned a fair price of $137.6 which at the time indicated a 71.82% upside. The reason for this targets was because I updated my models following Q2 2024 released in November 30, 2023 , and I explained how weight loss drugs will not affect Medtronic. This last one drove me to upgrade Medtronic from "buy" to "strong buy". So far, my thesis has materialized, since Medtronic reported Q3 2024 and it beat estimates, which means that weight loss drugs didn't eat at Medtronic's market share.
In this article I will update my models with the available financial data from Q3 2024 released in February 20 2024 . According to my models, a rally in Medtronic's stock is (at least in theory) almost guaranteed since the most conservative model suggests an upside of around 46.9% and annual returns of 21.2% throughout 2029. Nevertheless, available analysts' estimates suggest an even higher upside of 107.5% and annual returns of 36.8% throughout 2029....
Medtronic: Its Recent Beat Proves That It Continues To Be A Rock