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FDA Approval Widens Medtronic's (MDT) TAVR Platform Reach

Medtronic plc MDT, a well established player in the medical technology, services and solutions space, recently announced FDA approval for the extended use of its self-expanding CoreValve Evolut transcatheter aortic valve replacement (TAVR) platform. With this approval, patients with symptomatic severe aortic stenosis and at an intermediate risk for open-heart surgery will be eligible for treatment using the technology.

Currently, the CoreValve Evolut platform comprises CoreValve, CoreValve Evolut R and the CoreValve Evolut PRO system. Notably, in Mar 2017, CoreValve Evolut PRO system also received FDA approval to be used on symptomatic patients who are at high or extreme risk for open heart surgery.

According to Medtronic, per evidences from its clinical SURTAVI trials, the unique supra-annular design of CoreValve Evolut TAVR platform for unsurpassed hemodynamic, fewer mortality rates and decreased stroke occurrences coupled with smooth and rapid recovery makes it a perfect solution for patients.

Medtronic has been moving steadily on the back of impressive contributions from the core Cardiovascular segment (CVG). In fourth-quarter fiscal 2017, this segment contributed nearly 36% to total revenues. A major growth driver within this segment was the Coronary and Structural Heart sub-segment that accounted for 29.7% of CVG revenues.

Per management, strong market adoption of the CoreValve Evolut platform in recent times acted as a major tailwind in this category. In such a scenario, FDA’s latest development in this space will definitely boost the company’s performance in the concerned segment.

Notably, per a report by Medgadget, the global heart valve repair and replacement market is expected to grow from $2,281.2 million in 2014 to $3,767.0 million in 2020, at a CAGR of 8.7%.

We believe that unhealthy lifestyle and a rise in ageing population will continue to result in high incidence of cardiovascular diseases. This is further strengthened by data provided by GBI Research. Per the report, the global cardiovascular diseases market will see a CAGR of 4.1% by 2019, and within this space, the U.S. market is expected to witmess the highest momentum at a CAGR of 4.7%.

Though based in a highly fragmented heart valve repair and replacement market, Medtronic faces strong competition from global leaders like Boston Scientific Corporation BSX and Edwards Lifesciences Corporation EW, among others. Boston Scientific’s LOTUS Valve platform and Edwards Lifesciences’ SAPIEN XT SAPIEN 3 offerings are worth a mention in this regard.

Medtronic has been lagging the broader Medical Instruments market, gaining 8.8% as compared to the industry’s 9.2% over the last three months. However, the company outperformed the 3.4% gain of the S&P 500 market over the same time frame. The latest positive news is expected to provide some impetus to the company in the niche market.

Zacks Rank & A Key Pick

Medtronic currently carries a Zacks Rank #3 (Hold). A better-ranked medical stock is Mesa Laboratories, Inc. MLAB with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Mesa Laboratories has a positive earnings surprise of 2.84% for the last four quarters. The stock added roughly 13.9% over the last three months.

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