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28 Sep, Wednesday
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Bull Trader USA

Medtronic Stock Is Falling After Sales Miss. It Isn’t All Bad News.

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Medtronic makes medical devices.

David Maung/Bloomberg

Medical-device company


Medtronic

reported sales short of Wall Street’s expectations and slashed its outlook for revenue growth on Tuesday.

Shares in


Medtronic

(ticker: MDT) fell 2% Tuesday after the company released earnings for the quarter ending Oct. 29, which it reports as the second quarter of fiscal year 2022. Medtronic is registered in Ireland but primarily operates in the U.S.

The group reported revenue of $7.85 billion in the quarter, up 3% from last year’s levels but short of the $7.96 billion expected by analysts, according to FactSet data.

Markets are unlikely to favor the outlook for revenue at Medtronic, which also cut its revenue guidance for the remainder of the fiscal year. Medtronic now expects sales growth of 7% to 8%, down from prior guidance of around 9%.

This was due to “greater-than-expected market impact of the pandemic and healthcare system staffing challenges in the fiscal second quarter, which is expected to continue into the second half of the fiscal year,” the group said in its earnings release.

But the company reiterated its full-year earnings per share (EPS) guidance in a range of $5.65 to $5.75. And it was earnings that shone bright in the latest release, with adjusted operating profit of $2.1 billion yielding EPS of $1.32, ahead of the $1.29 predicted by Wall Street.

“Medtronic’s 2QF22 anemic organic revenue growth of just 2% year-over-year is cause for concern as investors look for what might get the company’s top line going again,” said Lee Brown, an analyst at investment research firm Third Bridge. But Brown conceded there were some bright spots.

The analyst noted strong growth in the company’s coronary and peripheral vascular device businesses, and was upbeat about the adoption of the Micra—one of Medtronic’s pacemakers.

“Our experts are universally enthusiastic about the company’s Micra, which is the world’s smallest pacemaker,” Brown said. “Some describe it as innovation at the highest level in the cardiovascular space. Micra has potentially opened up the opportunity for people to have a pacemaker implant who historically were not eligible.”

Write to Jack Denton at jack.denton@dowjones.com

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