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Shares of Medtronic (NYSE:MDT) were downgraded to Market Perform from Outperform by a Raymond James analyst on Wednesday, stating that the firm is “growing impatient.”
The analyst downgraded the stock following its fiscal Q1 earnings release on Tuesday, stating the company’s valuation has been their core thesis this year, and the factor still holds, but the implied F2H23 ramp leaves them less confident in their estimates.
“We fully acknowledge that sentiment is low, but we expect investor skepticism around the revenue ramp to keep the stock range-bound. Supply chain dynamics have disrupted MDT’s growth more so than peers, and our concern is that it will take longer for MDT to regain momentum,” said the analyst.
The analyst is also increasingly concerned that a higher level of investment is needed to drive a mid-single-digit revenue growth profile.
“We made no material changes to our FY23 estimates (and sit at the low end of guidance), but lowered FY24 EPS by 3% and sit ~$0.20 below consensus. Valuation limits the downside, and we believe management is making the right investments for the long-term, but for us, we believe there are other large-cap value names in our coverage with a more attractive risk/return profile,” concluded the analyst.
