What Does This Heart Therapist Hold For You
Nitesh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Medtronic (NYSE: MDT) manufactures and sells device-based medical therapies worldwide and it provides products for the diagnosis, treatment, management of heart rhythm disorders and heart failure. The heart company’s better than expected results must have pumped blood in investors' veins and boosted their confidence. The company reported revenue of $4.1 billion and its stock price is at an all time high in the last ten quarters.
Glimpse of Others in the Industry
One of the competitors of Medtronic, Boston Scientific (NYSE: BSX) develops, manufactures, and markets medical devices used in various interventional medical specialties worldwide. It hasn't had a lot to celebrate recently as it reported a one-time loss in which sales fell by more than 7% and its shares were down by more than 9% in the last month. Although recently it scored positive results for a heart device clinical trial that showed decreased patient death and offers optimistic outlook for the company's stakes in its cardiology departments. It's a good step towards maintaining and growing Boston Scientifics’ presence in treatment of advanced heart diseases and thus poses a threat to Medtronic.
Johnson & Johnson (NYSE: JNJ) together with its subsidiaries, engages in research and development, manufacture, and sale of various products in the health care field worldwide. Johnson & Johnson is made up of three main segments: consumer products, pharmaceuticals, and medical devices/diagnostics, which recently completed its purchase of Synthes to add to its growing portfolio of medical devices and reported a quarterly profit of $1.25 million. Johnson & Johnson forecasts an annualized growth of 5.87% as compared to 5.03% growth rate of Medtronic. Further Johnson is looking forward to boost its earnings through acquisitions of medical device makers-specifically heart valve product producers leaving behind Medtronic in competition.
A Look on Medtronic’s Performance
For the second quarter ending Oct. 26, it reported revenue of $4.1 billion, which represents growth of 5% on a constant currency basis after adjusting for a $118 million unfavorable impact of foreign currency translation. The diluted earnings per share have increased by 5% to $0.88 per share. Referring to emerging markets Q2 growth rate of MDT was 18%, a 400 basis point improvement over last quarter.
Although adjusting for the net gains related to the Advanced Energy acquisition of PEAK and Salient in Q2 last year, non-GAAP earnings and diluted earnings per share increased by 4% and 9%, respectively. MDT lost a litigation related to Structural Heart business due to which Q2 GAAP earnings and diluted earnings per share showed a decrease of 26% and 23%, respectively.
Prospects of the Company
The emerging market did not help Medtronic to meet its 20% targeted growth rate (Actual rate of 18%). As a result of which it is executing the strategies to achieve its desired level of performance consistently over the long-term. In the Diabetes business before the end of the fiscal year, it expects to receive U.S. approval and CE Mark for MiniMed 530G insulin pump and sensor system in diabetes treatment. Further in the next fiscal year 2014, MDT is targeting the launch of Advisa MRI pacemaker in the U.S. and next-generation Multi Electrode Renal Denervation System in Europe. Medtronic is looking forward to bring transcatheter valves and renal denervation products to the U.S. market in the fiscal year 2015
It is expected that the strategic alliance between Medtronic, the world’s largest medical device company, and LifeTech Scientific Corporation in which Medtronic will have 19% equity stake, will create economic value to healthcare consumers and providers worldwide.
Take Away Advice
Medtronic gained over 200 basis points of global ICD share sequentially, and its shares are now at the highest level in last 10 quarters. In its aortic business, it gained global AAA share on both a sequential and year-over-year basis. The company’s current investments should reap benefits in the future through its increased R&D expenses in the recent quarters. Therefore Medtronic is a good long-term investment for far-sighted investors. So, I recommend to hold the company’s stock until it is able to materialize its anticipations.
Niteshag has no positions in the stocks mentioned above. The Motley Fool owns shares of Johnson & Johnson and Medtronic. Motley Fool newsletter services recommend Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!