Newspaper article The Florida Times Union

Medical Device Maker Medtronic's Stock Reaches 4-Year High

Newspaper article The Florida Times Union

Medical Device Maker Medtronic's Stock Reaches 4-Year High

Article excerpt

Byline: Mark Basch

Medtronic Inc. was trading at its highest level in more than four years last week after a strong earnings report for the first quarter ended July 29.

The Minneapolis-based medical device maker reported revenue rose 15 percent to $2.7 billion and earnings before special charges rose 16 percent to $615.9 million, or 50 cents per diluted share. That beat the consensus forecast of analysts surveyed by Thomson Financial by a penny.

Medtronic also reiterated its forecast that revenue for the entire fiscal year will be between $11.1 billion and $11.6 billion, with earnings of $2.10 to $2.15 a share. It also projects revenue to reach $14 billion to $16 billion in two years, with earnings reaching $2.70 to $2.90 a share.

The company said its revenue in its spinal, ear, nose and throat and Navigation surgical instrument division rose 22 percent in the first quarter to $589 million. That division includes its Medtronic Xomed business in Jacksonville, which makes surgical instruments for ear, nose and throat doctors.

But most of that growth came from the spinal business. Medtronic does not break down its revenue data further but a report by First Albany Capital analyst Jason Mills said ear, nose and throat sales in the first quarter "were slightly below expectations."

But overall, Mills has a "strong buy" rating on Medtronic's stock. "We think upside first-quarter results are the beginning of a commensurate trend," his report said.

On the other hand, Piper Jaffray & Co. analyst Thomas Gunderson disagrees, giving the company a "market perform" rating.

"We believe top-line growth and earnings leverage will be in line with 'average' expectations," Gunderson's latest report said.

Overall, the widely-followed stock has a positive outlook. According to Bloomberg News, 24 analysts have a "buy" rating, nine have a "hold" rating and one rates it a "sell."

Medtronic's stock rose from $54.57 before its Aug. 17 earnings report to a high of $56.99 last week, its highest level since January 2001.


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