Medtronic Q3 in focus amid MedTech’s post-COVID gains

Medtronic (NYSE:MDT) is scheduled to report its Q3 FY24 results on Tuesday before the opening bell, with investors expecting another strong quarter from the Dublin, Ireland-based medical device maker as MedTech's post-pandemic recovery continues.

With their latest financials, MDT's peers have validated the recent optimism in the sector: Johnson & Johnson (JNJ), Boston Scientific (BSX), Stryker (SYK), and Abbott (ABT) have all either met or exceeded expectations with their Q4 results.

Recent remarks from health insurers Humana (HUM), UnitedHealth (UNH), and CVS Health (CVS) about an unexpected uptick in medical procedures have given credence to a bullish narrative for MedTech as seniors return to hospitals to obtain care after pandemic-era restrictions.

Even Medtronic (MDT) is upbeat about its growth prospects, according to Cowen analyst Joshua Jennings, who has an outperform rating and a $90 target on the stock.

"MDT has said it expects another sequential acceleration in its underlying sales growth in F4Q, thanks mainly to ramping contributions from its new products," Jennings wrote.

The company hasn't disappointed investors with its historical financials. Over the past two years, MDT has beaten Wall Street's estimates for quarterly earnings 88% of the time, while its revenue figures have exceeded forecasts 63% of the time.

Recent approvals of some of its key products will add even more significance to the earnings release ahead of their market rollout.

Following the FDA approval for its PulseSelect cardiac ablation system in December, MDT said it would launch the product in early 2024. Meanwhile, MiniMed 780G, a newly introduced insulin pump in MDT's diabetes portfolio, is on track for a phased commercial rollout in Europe this summer with its updated Simplera Sync glucose monitoring system.

Despite a number of revenue downgrades on Wall Street in recent months, analysts' Q3 expectations for Medtronic (MDT) stand at $7.95B in revenue with ~3% YoY growth and $1.26 earnings per share with ~3% YoY decline.

Over the past three months, analysts have cut MDT's upcoming revenue forecasts 21 times with only one upgrade. However, the company's earnings results were subject to only one downward revision and 17 upward revisions.

With its Q2 financials in November, Medtronic (MDT) increased its FY24 adjusted earnings guidance to $5.13–$5.19 in line with consensus and set its revenue growth forecast at 2.6% on a reported basis, slightly below consensus.