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Medtronic Preliminary Sales Dip Y/Y, Hurricane Blow Lessens

Medtronic plc MDT announced dull preliminary sales results for second-quarter fiscal 2018. Preliminary worldwide revenues for the quarter dipped 4% year over year to $7.05 billion. The Zacks Consensus Estimate of $7.09 billion remains a tad higher than the reported preliminary revenue figure.

Per Medtronic, the year-over-year decline in the preliminary sales performance was driven by the company’s divestiture of its Patient Care, Deep Vein Thrombosis (Compression) and Nutritional Insufficiency businesses to Cardinal Health that occurred at the beginning of the quarter.

On a comparable, constant currency basis (adjusting for the divestiture and a positive impact of $35 million from foreign currency), the company’s second-quarter preliminary revenues increased 3% year over year. The company also noted that excluding the impact of Hurricane Maria, second-quarter revenue growth would have been 4% on a comparable, constant currency basis.

Also, per the preliminary report, the impact from Maria was approximately $55-$65 million on the company’s second-quarter top line. Besides, the hurricane left an adverse impact of roughly 3 cents on its second-quarter non-GAAP earnings per share (EPS).

Excluding the effect of Maria, Medtronic reaffirmed its fiscal second-quarter guidance.The company expects adjusted EPS to be flat to slightly up on a comparable, constant currency basis from $1.04 in the year-ago quarter. It also expects a favorable impact of a penny from foreign currency translation on the quarter’s adjusted EPS.

Despite the year-over-year drag in preliminary sales, it is encouraging to note that the latest projection is actually an improvement from the company’s earlier anticipationabout the financial impact of Maria which was provided a month back. That time, Medtronic had projected both fiscal second-quarter 2018 revenues and adjusted net earnings to the extent of $250 million.

More specifically, the Minimally Invasive Therapies Group and the Restorative Therapies Group were expected to be worst hit. Notably, Medtronic is slated to release its second-quarter fiscal 2018 results on November 21 before the market opens.

Zacks Rank & Key Picks

Medtronic carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader medical sector are PetMed Express, Inc. PETS, Luminex Corp. LMNX and Myriad Genetics, Inc. MYGN. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has soared roughly 78.6% over a year.

Luminexhas a long-term expected earnings growth rate of 16.3%. The stock has gained 1.9% in a year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has surged 76.4% in a year’s time.

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