Medtronic stock advanced Tuesday after momentum in its diabetes business helped drive better-than-expected organic growth in its fiscal first quarter.
Overall, $8.01 billion in adjusted revenue climbed 5.3% organically, ahead of the company's own expectations for 4% to 4.5% growth. On a strict, as-reported basis, $7.92 billion in sales increased 2.8% and narrowly edged out forecasts for $7.9 billion, according to FactSet.
The company also earned $1.23 per share, minus some items, beating projections by three pennies. Earnings inched 3% higher year over year.
Edward Jones analyst John Boylan called it a "decent" quarter for Medtronic. He noted strength from the diabetes business. Medtronic and Abbott Laboratories just announced a deal to link their devices.
"It may take some time to see this partnership bear fruit, but we believe the diabetes business is pointed in the right direction," he said in a report.
On the stock market today, Medtronic stock rose 0.7% to close at 85.38, paring steeper gains in earlier trades. Shares have been forming a flat base since February and are now approaching a buy point at 89.18, according to MarketSurge.
Medtronic Stock: Cardio, Neuroscience Sales Jump
Evercore ISI analyst Vijay Kumar called out beats from the cardiovascular portfolio and neuroscience divisions, though medical-surgical sales came in light.
Cardiovascular sales grew 5.5% on a reported basis and 6.9% organically to $3.01 billion. Neuroscience products generated $2.32 billion in sales, up 4.4% on a reported basis and 5.3% organically.
Diabetes device sales shined with 11.8% growth to $647 million. On an organic basis, sales surged 12.6%. Medtronic noted "very high" CGM attachment. Continuous glucose monitors, or CGMs, are body-worn devices that track blood sugar in real time.
Medical-surgical sales were light at nearly $2 billion, down a fraction on a reported basis and 1% organically.
Kumar kept his outperform rating and 100 price target on Medtronic stock.
Medtronic Raises Outlook For The Year
Medtronic slightly hiked its guidance and now expects to earn an adjusted $5.42 to $5.50 per share. That's up 2 cents on the high end from its prior outlook. Its new earnings guidance range represents year-over-year growth of 4% to 6%.
The company also expects sales to grow 4.5% to 5% organically, above its previous call for 4% to 5% growth. Including the impact of exchange rates, Medtronic expects adjusted revenue to increase 3.4% to 4.3%.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
