Medical device manufacturer Medtronic (MDT +1%) posted a strong Q1 performance, pushing its stock toward 52-week highs. MDT, known for its diverse portfolio of medical devices, slightly raised the low end of its FY25 (Apr) adjusted EPS and organic revenue growth forecasts. Except for its Medical Surgical segment, which saw a slight decline, MDT experienced gains across its portfolio, highlighting strong market demand and new product cycles.
- MDT reported adjusted EPS of $1.23, a 2.5% increase yr/yr, and revenues of $7.97 billion, a 3.4% rise as reported and a 5.3% organic growth. This marks MDT's ninth consecutive earnings beat, driven by top-line growth and margin improvement activities, including pricing and cost-reduction programs.
- Cardiovascular sales jumped by 5.5% to $3.01 billion, driven by continuous investments in technology. Neuroscience and Diabetes segments also saw decent revenue growth, supported by new products like MDT's Pain Stim, which grew 11% in its first U.S. quarter.
- Medical Surgical segment declined by 0.4% yr/yr due to unfavorable comparisons from back-order fulfillment in early FY23 and ongoing physician strikes in the Korean market. Management expects this segment to return to normalized growth in the latter half of FY25.
- MDT adjusted its FY25 guidance, raising the low end of adjusted EPS to $5.42-5.50 and organic revenue growth to +4.5-5.0%.
Despite some headwinds, MDT's Q1 results showed progress. The company continues to benefit from R&D efforts, acquisitions, and strong market share in Cardiovascular and Neuroscience. While reliance on Medicare reimbursement rates adds uncertainty, MDT remains optimistic about future developments.
MDT's steady performance and a solid 3.2% annual dividend yield make it a stable investment. The company recently increased its dividend at the end of FY24, continuing its decades-long trend of annual dividend raises. MDT is worth keeping on the radar.
