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UBS analysts double-downgraded Medtronic (NYSE:MDT) shares to Sell from Buy on near-term sales and EPS downside risk.
They believe the ongoing transformation at Medtronic will take time. As such, the analysts lack “conviction that MDT can return to sustainable mid-single-digit top-line growth and drive consistent operating margin upside.”
UBS sees sales growing 3.8% at CAGR while the consensus stands at 4.8%. More precisely, UBS’ survey shows minimal diabetes share gains.
“In FY24 and FY25, we are below consensus EPS by low-single-digits and high-single-digits, respectively, driven mostly by lower sales. While MDT may gain marginal share in some businesses, i.e. Evolut FX in TAVR (Transcatheter Aortic Valve Replacement), MDT is losing share in others, i.e. cryo, peripheral, and diabetes, to name a few, which nets to at best MDT growing in line with its ~4.5% WAMGR,” the analysts added.
They are also cautious on the valuation as the current multiple leaves almost no room for expansion.
The new price target is $79 per share, down from the prior $127.
Medtronic shares are down 1% in premarket Wednesday.
