Barclays analyst criticizes Medtronic — Here's what CEO Omar Ishrak had to say

Written by Laura Dyrda | January 09, 2019 | Print  |

After Medtronic CEO Omar Ishrak gave a presentation at the 37th JP Morgan Healthcare conference in San Francisco Jan. 7, a Barclays analyst lowered her price target, according to CNBC.

Five things to know:

1. Medtronic stock has been down 4 percent in the past year, and is down 9 percent year to date. The company reported $30 billion in fiscal year 2018 revenue and projects revenue will be at 5 percent to 5.5 percent in the 2019 fiscal year. Mr. Ishrak reported sales expectations in the midrange of previous guidance.

2. In the first two quarters of the 2019 fiscal year, Medtronic more than doubled free cash flow, hitting $2.4 billion for the first half of the year.

3. Barclays analyst Kristen Stewart cut her price target for the company's shares after hearing from Mr. Ishrak, lowering it from $113 to $104. She also reiterated an overweight rating and said in a client note she thought Mr. Ishrak's comments were "cautious."

"If it isn't one thing, it seems to be another when it comes to Medtronic," Ms. Stewart said, as reported by CNBC. "Medtronic has had a somewhat spotty record when it comes to providing guidance and has been affected by a series of one-off events over the past year and a half."

4. Mr. Ishrak did not agree with Ms. Stewart's assessment, according to the report, and felt her statement didn't reflect the tenor his comments. The guidance took several factors into consideration, including a softening cardiovascular unit, FDA concerns about quality and a potential change to the company's tax rate. "We had to give a head's up that there may be tax issues; that may be a possibility. It's not something we've given up on. It's something we are going to work on and we'll get this right," he said.

5. Mr. Ishrak told CNBC's Jim Cramer that the company has a strong pipeline of innovation, aiming to create new markets and disrupt current markets. The company completed its acquisition of the spine robotics company Mazor in the past year and touted innovation in the pacemaker market with Micra, which is a less invasive procedure than current methods.

"[Mazor X is] at its formative stages. It's just starting," said Mr. Ishrak. "What Medtronic can do is take a product like that and company like that and scale it at a speed that that company alone cannot reach. It's more restricted to spinal procedures, but spinal procedures are one of the biggest healthcare challenges and in planning those procedures and the implementation of those procedures and the guidance of the implants, this is an invaluable product and that's what we will drive."

More articles on orthopedic devices:
Zimmer Biomet, NuVasive, Alphatec & more: 11 device company notes
Stryker recalls spine device: 5 things to know
Zimmer Biomet CEO Bryan Hanson: Growth in 2019

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