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Medtronic (NYSE:MDT) fell nearly 5% in pre-open trading Tuesday, following a miss on the top line for the second quarter and lower full-year guidance.
The medical device maker reported that revenue fell 3% to $7.6 billion, missing the Wall Street consensus of $7.7B. The company said the results reflect “slower supply recovery or lower than anticipated underlying market procedure volumes in certain businesses and the pricing impact of volume-based procurement in China.”
On the bottom line, the company reported a beat with non-GAAP EPS coming in a $1.30 versus the consensus of $1.28. Non-GAAP EPS fell 2% from last year.
“Slower than predicted procedure and supply recovery drove revenue below our expectations this quarter. We continue to take decisive actions to improve the overall performance of the company, including streamlining our organizational structure, strengthening our supply chain, driving a performance culture, and strategically allocating capital to support our best growth opportunities with the investments they deserve,” said CEO Geoff Martha.
Looking to the full year, Medtronic now expects non-GAAP EPS in the range of $5.25 to $5.30, down from $5.53-$5.65 previously. The company expects fiscal year 2023 second-half revenue growth of 3.5% to 4.0% on an organic basis, an acceleration over the first half, but below the implied upper single-digit guidance for the second half previously.
Stifel analysts expect shares to be pressured after the report.
“MDT shares will likely be pressured by this quarterly report, pending management commentary,” the analysts said. However, they maintained a Buy rating on the stock saying, “[g]iven the still-complicated macro operating environment, MDT could be one of the companies most leveraged to benefit from recovery when these headwinds wane.”
