Medtronic (NYSE: MDT) is
a medical technology company, specializing in a variety of implantable biomedical devices. Leading products include pacemakers, stents, catheters, glucose monitoring systems and insulin pumps. The firm's Cardiac Surgery segment offers products for the repair and replacement of heart valves, surgical accessories, and surgical ablation products. A Physio-Control unit provides external defibrillation and emergency response systems. Medtronic sells its products to hospitals, clinics, third party healthcare providers and governmental healthcare programs. Boston Scientific (NYSE: BSX) and Johnson & Johnson (NYSE: JNJ) are major competitors.
Investors were pleased last week, when Medtronic announced fiscal Q4 EPS of 78 cents and revenues of $3.86 billion. Analysts had been expecting 72 cents and $3.72 billion. Management also guided FY09 EPS to $2.94-$3.02 ($2.96 consensus) and FY09 revenues to $15-$15.5 billion ($15.14 consensus). UBS subsequently reiterated its "buy" rating on the shares.
MDT popped
on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers recommend the issue with eight "strong buys," nine "buys" and eleven "holds." The MDT Price to Free Cash Flow ratio (24.29), Sales Growth rate (17.68%), Operating Margin (21.35%), Net Profit Margin (16.51%), Return on Assets (10.70%), Return on Investment (12.53%) and Return on Equity (19.82%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 77% of the outstanding shares. The stock is one of those used to calculate the S&P 100 and S&P 500 Indexes. Over the past 52 weeks, it has traded between $44.26 and $57.99. A stop-loss of $44.90 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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