Medtronic Upgraded to “Overweight” by Morgan Stanley (MDT)
Medtronic (NYSE:MDT) was upgraded by equities research analysts at Morgan Stanley from an “equal weight” rating to an “overweight” rating in a research note issued to investors on Tuesday. The firm currently has a $42.00 target price on the stock, down from their previous target price of $66.00. Morgan Stanley’s price objective would indicate a potential downside of 30.03% from the stock’s previous close.
The analysts wrote, “We are upgrading MDT to Outperform (from Neutral) following the planned COV acquisition announced on 6/15. “We are leaving our MDT estimates unchanged pending further review of the transaction, but now believe the earnings accretion likely through the acquisition is not fairly reflected in MDT’s share price. Excluding amortization our estimates imply year 1 / 3 EPS accretion of $0.46 (10%) / $0.88 (17%) assuming $250M/$750M in cost synergies & zero sales synergies. Also, we assume an 18% tax rate in FY16 dropping to 16.5% by FY18. “In terms of financing, we assume MDT shares finance $25.4B of the deal with the rest from cash ($11.5B) & debt ($6.0B) paying 4% interest. Applying a 14X P/E multiple to $0.88 in FY18 EPS accretion & discounting back 3 years at 7.5% implies ~$10 in share price upside. We’re raising our DCF-based price target to $70 from $66 based on a slightly higher assumed terminal growth rate.”
A number of other analysts have also recently weighed in on MDT. Analysts at RBC Capital upgraded shares of Medtronic from a “sector perform” rating to an “outperform” rating in a research note on Tuesday. They now have a $73.00 price target on the stock, up previously from $61.00. Separately, analysts at JPMorgan Chase & Co. upgraded shares of Medtronic from a “neutral” rating to an “overweight” rating in a research note on Monday. They now have a $78.00 price target on the stock, up previously from $64.00. Finally, analysts at William Blair upgraded shares of Medtronic from a “market perform” rating to an “outperform” rating in a research note on Monday. Five equities research analysts have rated the stock with a hold rating and thirteen have given a buy rating to the company. The company has an average rating of “Buy” and an average target price of $65.13.
Medtronic (NYSE:MDT) opened at 60.03 on Tuesday. Medtronic has a 52 week low of $51.06 and a 52 week high of $64.33. The stock’s 50-day moving average is $60.35 and its 200-day moving average is $58.81. The company has a market cap of $59.970 billion and a price-to-earnings ratio of 19.88. Medtronic also was the target of unusually large options trading activity on Monday. Investors purchased 14,580 call options on the company. This represents an increase of approximately 453% compared to the average daily volume of 2,636 call options.
Medtronic (NYSE:MDT) last posted its quarterly earnings results on Tuesday, May 20th. The company reported $1.12 earnings per share (EPS) for the quarter, meeting the consensus estimate of $1.12. The company had revenue of $4.60 billion for the quarter, compared to the consensus estimate of $4.58 billion. During the same quarter in the previous year, the company posted $1.10 earnings per share. The company’s revenue for the quarter was up 2.4% on a year-over-year basis. Analysts expect that Medtronic will post $4.05 EPS for the current fiscal year.
The company also recently declared a quarterly dividend, which is scheduled for Friday, July 25th. Stockholders of record on Thursday, July 3rd will be given a dividend of $0.305 per share. This represents a $1.22 dividend on an annualized basis and a yield of 2.03%.
Medtronic, Inc (NYSE:MDT) is engaged in medical technology – alleviating pain, restoring health, and extending life for millions of people worldwide.
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