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Based in Dublin, Ireland, Medtronic plc (MDT) is a leading global medical device company with a market cap of $111.6 billion. Operating in the healthcare sector, the company develops and manufactures a broad range of device-based medical therapies across Cardiovascular; Medical Surgical; Neuroscience; and Diabetes segments.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Medtronic fits this criterion perfectly, exceeding the mark. Medtronic leads the global cardiovascular market with its innovative pacemakers and defibrillators, maintaining a broad presence across 150 countries and treating over 70 health conditions.
However, Medtronic has fallen 8.6% from its 52-week high of $91. Shares of the medical device manufacturer have dipped 2.3% over the past three months, underperforming the broader S&P 500 Healthcare Sector SPDR’s (XLV) marginal gains over the same time frame.
Longer term, MDT is up marginally on a YTD basis, lagging behind the XLV’s 7.8% gains. Moreover, shares of Medtronic have declined marginally over the past 52 weeks, compared to XLV’s 12.7% gains over the same time frame.
To confirm the bearish price trend, MDT has been trading mostly below its 50-day moving average despite some fluctuations since mid-February. While it has been trading above its 200-day moving average despite some fluctuations since late-December.
Medtronic has underperformed primarily due to supply chain disruptions, challenges in the healthcare industry stemming from the COVID-19 pandemic, and the company's exit from unprofitable product lines like ventilators. Moreover, despite beating Q4 revenue and profit projections, the stock fell 5.1% on May 23 due to a lower-than-expected forecast for the current quarter, primarily influenced by soft demand for certain heart devices used for repair and replacement of heart valves.
To emphasize the stock’s underperformance, top rival Abbott Laboratories (ABT) has gained 5.7%, outperforming MDT over the past 52 weeks. However, shares of Abbott are down 2.3% on a YTD basis, lagging behind MDT stock.
Despite the stock’s weak price action, analysts are cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 27 analysts covering the stock, and the mean price target of $92.91 represents a premium of 11.8% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
