Why Medtronic Is Poised to Keep Rallying

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Medtronic (NYSE: MDT  ) climbed 1% today after Deutsche Bank upgraded the medical device giant from "hold" to "buy."

So what: Along with the upgrade, analyst Kristen Stewart boosted her price target to $66 (from $56), representing about 16% worth of upside to yesterday's close. While value investors might be turned off by the stock's big run in 2013, Stewart believes that there's room to run given several key catalysts that should help Medtronic improve its fundamentals even further.

Now what: Deutsche sees plenty of opportunities for P/E expansion and earnings upside over the long term.

"Over the past year, the company has improved its execution and has been delivering on its goals," noted Deutsche. "Medtronic is still largely a 'show me' story, but we believe over the next 9-12 months there will be several key catalysts that should increase investor confidence in the ability to accelerate top line and deliver sustained high single digit EPS growth."

With the stock up more than 30% year-to-date and trading at a 15-plus P/E, however, I'd wait for a wider margin of safety in case Medtronic doesn't grow as smoothly as Deutsche expects.

More compelling income opportunities
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2694967, ~/Articles/ArticleHandler.aspx, 4/20/2014 12:31:48 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement