Halister News

(Bloomberg) -- Medtronic shares fall the most in 2 months after 4Q margins missed estimates. Some analysts say better-than-expected EPS and rev. support strength of core business.

• MDT 4Q adj. EPS $1.27 vs est. $1.26; 4Q rev. $7.57b vs est. $7.49b; 4Q adj. oper. margin 30.3% vs est. 31.2% (avg of 4 analysts surveyed by BFW); FY17 EPS forecast of $4.60-$4.70 vs est. $4.70

BTIG (Sean Lavin)

• Operating results seen as “somewhat lackluster”
• Non-GAAP gross margin 68.8% missed est. 69.8%, magnitude of miss seen as surprising
• Buy, PT $82

RBC (Glenn Novarro)

• 4Q rev. beat led by strength in CRM, Structural Heart, and Minimally Invasive Therapies divisions
• Initial FY17 forecast “as expected,” looks conservative given strength in core business and Covidien-related cost savings
• 4Q operating margin of 30.3% missed ests. and MDT’s forecast; excluding FX, would have been ~31.8%
• Outperform, PT $87

LEERINK (Danielle Antalffy)

• 4Q results and FY17 outlook “basically in-line” with ests
• Gross and operating margins missed ests. again, could underscore investor concerns about operating leverage targets
• Notes MDT faces headwinds, competition in 2H FY17
• Market perform, PT $82

COWEN (Joshua Jennings)

• 5 consecutive qtrs of rev. growth near/above top of forecast, excluding FX, supports “seamless” integration of Covidien
• FY17 seen as strong; Cowen expects rev. ests. to be increased to reflect weakening USD
• Softness in operating margin will be overshadowed by strength in underlying fundamentals as seen by strong 4Q and FY17 view
• Outperform, PT $94

EVERCORE ISI (Vijay Kumar)

• FY17 EPS forecast seen “generally in-line” with mgmt commentary on 3Q call; says avg analyst est. may not have accounted for FX hedging
• Sees FY17 rev. forecast of 5%-6% growth as above investor expectations and “major point” in assuring growth is sustainable
• Buy, PT $83

DATA

• MDT down as much as 2.4%, biggest intraday drop since March 17
• Shares had risen 6.2% YTD through Friday
• Stock has 21 buys, 5 holds; avg PT $87: Bloomberg data

RELATED

• Earlier, Medtronic EPS View Midpoint Below Est.; 4Q Oper. Margin Misses
• Medtronic Operating Margin Misses; Buyback May Help: 4Q Review From Bloomberg Intelligence
• BI Key Earnings Metrics Analyzer
• Link to earnings conf. call transcript