Medtronic Pre-Earnings: Growth To Be Driven By Cardiovasuclar And Diabetes Segments

by Trefis Team
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Medtronic (NYSE: MDT) is set to report its Q2’17 earnings on November 22nd. (Fiscal years ending with April.) We can expect Medtronic to report a decent quarter, driven by revenue growth from a strong portfolio of products in both the Diabetes Group and the Cardio-Vascular Group(CVG). Medtronic’s cardiovascular group growth has likely been driven by Micra Transcatheter Pacing System (TPS) and MRI-implantable defibrillator. In addition, we can expect Medtronic to see strong revenue growth from its diabetes segment going forward, driven by the adoption of its Hybrid Closed Loop insulin delivery system that was recently approved by the FDA. It should be noted that the company’s Diabetes segment was the best performer in Q1 with its revenue growing by 2% on year-over-year basis, while other divisions experienced decreases.

In the table below we can note the key metrics as expected for Medtronic in Q2:

Screen Shot 2016-11-21 at 8.43.58 PM

Our price estimate of $94 for Medtronic is above the current market price.

See our complete analysis for Medtronic stock here

Diabetes Segment To Drive The Company’s Growth Going Forward

The company’s diabetes segment has likely outperformed in Q2 as well. It is the company’s smallest business segment, contributing about 7% to the firm’s revenue and close to 5% to its valuation, according to our estimates. However, with a slew of new products and technology-driven initiatives in the pipeline, Medtronic seems to be doing all the right things to boost its revenues from this segment. During the quarter, the company recently received U.S. FDA nod for its MiniMed 670G system, which is the first Hybrid Closed Loop insulin delivery system. This is a significant news as far as the company’s diabetes segment is concerned.

According to the International Diabetes Federation, there are about 415 million people worldwide suffering from diabetes and this number is expected to grow further. Medtronic’s management plans to increase the number for patients served to about 20 million patients, from the present 1 million.  In tandem, it expects to grow the segment revenue from about $2 billion to $4 billion by 2021.

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