Deutsche Bank Has Buy On Medtronic (MDT)

Deutsche Bank has a Buy rating and a $46 price target on shares of Medtronic MDT.

In a note to clients, Deutsche Bank writes, "While we are hopeful too that it will be approved given a somewhat favorable FDA panel review, it now seems less likely to be in the near-term. The absence of AMPLIFY adds risk to the trajectory of the Biologics franchise. We estimate Biologics sales (INFUSE) of nearly $900M (or 5.6% of sales), fairly even with FY10 after adjusting for the extra week and Osteotech acq. Our model assumes Biologic sales are flat in FY12 (slightly down adjusted for Osteotech), with sales growth of 3-4% in FY13 and beyond. FDA approval and timing is unclear; it turns on whether more trials are required or whether Medtronic has sufficient data already. To the extent it is not approved and there is additional payor push-back on off-label usage, sales could come under pressure and not expand as we have projected longer term. We are not yet adjusting our model as we look for clarity in the coming weeks. The restructuring announced add some flexibility to the model. We believe MDT shares may trade lower following the disappointing AMPLIFY update amplified by frustrations on the lack of disclosure on the Feb earnings call. However, longer term, given the stock's valuation, positive development on the warning letters and now higher likelihood of Protecta, Consulta CRT-P, and InterStim FDA approvals near-term, along with other products in the pipeline and the prospective positive change in strategy with the management succession, we still see upside to the stock."

Shares of MDT gained 16 cents yesterday to close at $39.80, a gain of 0.4%.