Medtronic's Endeavors Look Good

Medtronic (NYSE: MDT  ) closed out its fiscal year quite nicely, thanks in part to FDA approval of its drug-eluting stent, Endeavor.

Fourth-quarter revenue was up a solid 18% year over year. The company saw double-digit gains in all divisions except its cardiac rhythm segment, which registered more modest growth of 6%. Unfortunately, it is Medtronic's largest division, contributing more than a third of the company's revenue. Still, 6% growth isn't too shabby, especially since the company is still dealing with the recall of its implantable cardioverter-defibrillator (ICD) leads. Medtronic estimates its ICD market share has rebounded to more than 50% since the recall.

The U.S. launch of recently approved Endeavor helped push worldwide stent sales up 56%. Medtronic that estimates it ended the quarter with more than 20% of the U.S. market. The good news is that cardiologists aren't showing much brand loyalty to Johnson & Johnson (NYSE: JNJ  ) or Boston Scientific (NYSE: BSX  ) , enabling Medtronic to capture so much of the market in such a short time. The bad news is that Abbott Labs (NYSE: ABT  ) is hot on its heels; keeping that market share may not be as easy as capturing it was.

Earnings were flat year over year in the quarter, but that was partially because of a tax gain last year and charges associated with Medtronic's acquisition of NDI Medical this year. Excluding all the charges from both quarters, earnings were up 15% year over year.

Medtronic is looking for year-over-year revenue growth of 11% to 15%, and earnings per share 13% to 16% higher than last fiscal year's non-GAAP EPS. Higher margins and lower selling, general, and administrative costs relative to revenue should help the bottom line grow faster than revenue. While that looks pretty impressive, Fools should keep an eye on drug-eluting stent sales after Abbott launches its own such product. There's probably quite a bit of sales baked into the guidance, and which company will come out ahead in the stent skirmish is a big unknown at this point.

Motley Fool Rule Breakers is always on the hunt for hot medical device stocks and other cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription. 

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Income Investor newsletter. The Fool's disclosure policy endeavors to give satisfaction, sir.


Read/Post Comments (0) | Recommend This Article (2)

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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 649876, ~/Articles/ArticleHandler.aspx, 12/20/2014 5:41:25 AM

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