Medtronic Can See for Miles and Miles

Medtronic (MDT), one of the quietest stocks on our Buy List, finally spoke out, and did so loudly. The company raised its earnings forecast for next year, the year after that, and the year after that. In short, Medtronic sees strong earnings through the rest of the Bush administration.

Medical device maker Medtronic Inc. on Tuesday raised its earnings guidance through 2008, citing confidence in its performance and growth prospects, as well as a lower tax rate.
Excluding one-time items and expensing for stock options, the company said it expects fiscal 2006 earnings per share between $2.18 and $2.23, up from its previous outlook of $2.10 to $2.15, and analysts’ consensus profit estimate of $2.16, according to a Thomson Financial poll.
For fiscal 2007, Medtronic raised its earnings per share forecast to a range of $2.45 to $2.55, compared with prior guidance of $2.37 to $2.47. Analysts expect the company to earn $2.46 per share.
Medtronic also boosted its profit outlook for fiscal 2008 to between $2.78 and $2.98 per share, up from its previous estimate of $2.70 to $2.90 per share. Analysts expect a profit of $2.88 per share.
The company said it still expects revenue growth of 14 percent to 16 percent for the fiscal second quarter, as well as sales of $11.1 billion to $11.6 billion for the full year 2006. Analysts forecast revenue of $2.76 billion for the quarter and $11.49 billion for the year.
Medtronic also backed its outlook for revenue of $12.2 billion to $13.3 billion for fiscal 2007, and $14 billion to $16 billion for fiscal 2008. Analysts expect revenue of about $13 billion and $14.92 billion for 2007 and 2008, respectively.

First Albany reiterated its strong buy and raised its price target to $66. Deutsche Bank also maintained its buy rating. Despite steadily higher profits, the stock hasn’t done much over the past few years (see chart below). Medtronic is an excellent buy.
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Posted by on October 12th, 2005 at 9:01 am


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