Medtronic's turnaround is becoming more tangible, an analyst said Tuesday after the medtech giant beat Wall Street's forecasts, pushing MDT stock higher.
The star of Medtronic's fiscal second-quarter report was its new diabetes device, MiniMed 780G. This was the first full quarter following Medtronic's launch of the new glucose monitor and insulin pump. In the October quarter, sales of Medtronic's diabetes devices climbed 6.7% organically to $610 million.
"It may take some time for the diabetes unit to fully reach its potential in the U.S., as patients become aware of the new pump and as new products eventually come to market," Edward Jones analyst John Boylan said in a report. "But we believe the journey to predictable growth has begun."
On today's stock market, MDT stock popped 4.6% to 78.62. Shares just retook their 50-day moving average, according to MarketSmith.com.
MDT Stock: Strong Growth Beyond Diabetes
During the fiscal second quarter, Medtronic's adjusted earnings fell 4% to $1.25 per share, but that still topped expectations for $1.18 a share, according to FactSet.com. Total sales climbed 5.3% on a strict, as-reported basis to $7.98 billion. Organically, sales rose 5%. MDT stock analysts forecasted just $7.93 billion in sales.
Beyond strong diabetes devices sales, Medtronic posted bullish growth for its cardiovascular portfolio. Sales jumped 4.8% organically to $2.92 billion. Neuroscience and medical surgical sales also jumped a respective 4.2% and 5.6%. Neuroscience products, which includes devices that treat pain, brought in $2.29 billion in sales. Medical surgical sales were $2.14 billion.
Medtronic also raised its outlook and now expects full-year organic sales growth of 4.75% vs. its prior call for 4.5%. The company also expects adjusted profit of $5.13 to $5.19 per share, up 4 cents from the earlier guide. MDT stock analysts forecasted earnings of $5.12 a share and $32.17 billion in sales.
"We are encouraged to see Medtronic string two good quarters together this fiscal year along with consecutive (earnings per share) guidance increases," Boylan said. "Some investors may wish to see another quarter or two of solid results before giving Medtronic credit for its improving operations. However, we believe the company's turnaround is becoming more tangible."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
