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Why Medtronic Stock Is Sinking Today
MDTMedtronic(MDT) The Motley Fool·2025-02-18 18:08

Core Viewpoint - Medtronic's shares declined by 7.3% following the announcement of its fiscal 2025 third-quarter results, which revealed a revenue miss despite better-than-expected earnings [1][2]. Financial Performance - Medtronic reported third-quarter revenue of 8.3billion,reflectingayear−over−yearincreaseof2.58.3 billion, reflecting a year-over-year increase of 2.5%, but slightly below the Wall Street estimate of 8.33 billion [2]. - The diluted earnings per share (EPS) were reported at 1.01underGAAP,whiletheadjustedEPSwas1.01 under GAAP, while the adjusted EPS was 1.39, marking a 7% increase year-over-year and surpassing the analysts' average estimate of 1.35[2].RevenueConcerns−TherevenuemissisattributedtoachangeinU.S.distributorbuyingpatterns,asexplainedbyCEOGeoffMartha,whoindicatedthatthisdisruptionisexpectedtoberesolvedsoon[3].−Despitetherevenuemiss,thecompanyprojectsorganicrevenuegrowthforfiscal2025tobebetween4.751.35 [2]. Revenue Concerns - The revenue miss is attributed to a change in U.S. distributor buying patterns, as explained by CEO Geoff Martha, who indicated that this disruption is expected to be resolved soon [3]. - Despite the revenue miss, the company projects organic revenue growth for fiscal 2025 to be between 4.75% and 5% [4]. Future Outlook - Medtronic anticipates adjusted EPS for the current fiscal year to be in the range of 5.44 to 5.50,withthemidpointexceedingtheconsensusWallStreetEPSestimateof5.50, with the midpoint exceeding the consensus Wall Street EPS estimate of 5.45 [4]. Investment Considerations - The stock may not appeal to growth investors, but it could be attractive to income investors due to a forward dividend yield of 3.24% [5]. - Medtronic is close to potentially joining the Dividend Kings, having a track record of 47 consecutive years of dividend increases [5].