J.P. Morgan: MDT Fiscal 3Q11 Mostly In-Line

Medtronic MDT reported a mixed fiscal 3Q11 Tuesday morning, with revenues coming in mostly in-line “but quality down the income statement very light, in our view,” J.P. Morgan reports. “Specifically, the company's operating margin of 30.9% missed our projection by 180bps and pre-tax income of $1.001B actually declined 5.8% YOY and fell $102M shy of our thinking,” J.P. Morgan writes. “Medtronic made up for this on the tax line, with an effective rate of 10.6% vs. our 18.3% estimate adding $0.07 to adjusted EPS. The difference was even more significant versus the Street ($0.09), which had yet to reflect the extension of the R&D tax credit and was projecting a rate of 19.9%.” Medtronic closed Tuesday at $40.21.