Bloomberg News

Medtronic Profit Beats Analyst Estimates on New Stent Demand

May 22, 2012

Medtronic Inc. (MDT:US), the world’s biggest maker of heart-rhythm devices, reported fourth-quarter profit that beat analyst estimates and said 2013 earnings will be as much as $3.70 a share.

Profit excluding one-time items in the three months ended April 27 beat by 1 cent the 98 cent average of 24 analyst estimate (MDT:US)s (MDT:US) compiled by Bloomberg. Profit for this year will be $3.62 to $3.70 a share, the Minneapolis-based company said in a statement today. Analysts had estimated $3.66 for the year.

U.S. revenue from the cardiovascular business rose 24 percent after February’s introduction of the company’s Resolute Integrity drug-eluting stent, Medtronic said. The doubling of the U.S. market for the devices bolstered the results, wrote Michael Matson, an analyst with Mizuho Securities USA Inc. in New York, in a note to investors.

“All in, organic sales growth was 3.3 percent in the quarter, a meaningful improvement from 1.1 percent growth during the first nine months of the year,” said Michael Weinstein, a JPMorgan Chase & Co. analyst in New York. “Earnings quality was light, however, as operating income actually missed Street consensus by $52 million.”

Tax Benefit

A lower-than-expected tax rate and stabilizing demand for heart-rhythm devices like defibrillators also helped the quarter’s results, Matson said.

Fourth-quarter net income (MDT:US) increased 28 percent to $991 million, or 94 cents a share, from $776 million, or 72 cents, a year earlier, the company said in the statement. Revenue rose 3.1 percent to $4.3 billion as cardiovascular sales gained 9 percent to $958 million.

The company is emerging from a rough patch as sales become steady in markets that struggled since the recession, Chief Executive Officer Omar Ishrak said. The success of the Resolute stent and RestoreSensor, a spinal cord stimulator, show the company is benefiting from its innovation, while demand in emerging markets bodes well for growth, he said.

“Some of the markets have been under pressure are showing clear signs of stabilization,” including defibrillators and spinal products, Ishrak said in a telephone interview.

The company is developing less-expensive products for emerging markets, and they will make their way to the U.S. and Europe as hospitals look to lower costs, said Chief Financial Officer Gary Ellis. Medtronic is also talking with health insurer Aetna Inc. (AET:US) about programs that will highlight the value of devices for heart failure and diabetes, he said.

Medtronic fell (MDT:US) 2 percent to $36.96 at the close in New York. The shares have declined 12 percent in the past 12 months.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at

To contact the editor responsible for this story: Reg Gale at

Cash Is for Losers

Companies Mentioned

  • MDT
    (Medtronic Inc)
    • $72.79 USD
    • -0.14
    • -0.19%
  • AET
    (Aetna Inc)
    • $86.61 USD
    • -0.33
    • -0.38%
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