Analysts Note Medtronic's Tummy Tuck Surgery Sales Unaffected Globally Amid Weight-Loss Treatment(s) Rush

William Blair writes that Medtronic Plc's MDT Q1 FY24 witnessed a remarkable performance cascaded to the bottom line, amplified by improved gross margins due to better pricing discipline and effective control and leverage of operating expenses.

The positive trajectory observed in Q1 underscores Medtronic's efforts in stabilizing its business operations and delivering results in alignment with, if not exceeding, market expectations. 

Medtronic's future performance is expected to be buoyed by strategic areas and impending product launches. 

With shares trading at 15.8 times William Blair's calendar 2024 EPS, the analyst keeps the Market Perform rating on Medtronic stock.

Morgan Stanley is encouraged to see the U.S. launch of the 780G going well, with low 30s growth in durable pump sales. 

Taking a step back, Morgan Stanley analyst notes that the strong Q1 print across most modalities and street numbers moving up low single digit for 2024 on a comparatively under-owned stock is a good setup. Medtronic remains Morgan Stanley's top pick in U.S. MedTech. 

Oppenheimer writes that regarding GLP-1s, Medtronic does not anticipate a significant impact on diabetes due to its pump products targeting the intensive insulin market. This market is relatively underpenetrated. 

While some influence has been observed on bariatric surgery in specific regions, the global impact on bariatric sales is minimal in total sales.

With a Buy rating, Mizuho Securities raised the price target to $100 from $95.

The analyst writes that turnaround shifts in the right direction.

Medtronic disclosed that its MedSurg segment did experience "modest impacts" in US bariatric volumes stemming from GLP-1 trialing, echoing Intuitive Surgical's ISRG 2Q commentary.

Commentary around diabetes was more opaque but suggestive that an air pocket is a potential headwind.

Price Action: MDT shares are up 0.07% at $83.77 on the last check Wednesday.