Medtronic Gains Investor Confidence with Intersect Buyout
Stock Analysis & Ideas

Medtronic Gains Investor Confidence with Intersect Buyout

Medical device manufacturer Medtronic (MDT) is strengthening its foothold in an increasing number of markets in which it serves. On August 6, it inked a deal to acquire Intersect ENT (XENT), a leader in ENT medical technology, for $1.1 billion.

The deal is expected to be accretive to the company’s weighted average market growth rate (WAMGR) after 12 months of concluding the transaction. Moreover, the acquisition is likely to expand Medtronic’s portfolio of ENT products.

The president of the ENT segment of the Neuroscience Portfolio at Medtronic, Vince Racano, said, “Intersect ENT’s sinus implants are clinically proven to offer relief and healing to patients suffering from chronic rhinosinusitis. Combining this innovative technology with our established global presence and sales infrastructure will allow us to broaden our capabilities while expanding access to these valuable therapies.”

Three days ago, Needham analyst Michael Matson assigned a Buy rating to the stock and increased the price target to $146 from $138.

“We believe Medtronic’s deep product pipeline should drive improving revenue growth and enable margin improvement resulting in P/E multiple expansion,” said Matson, justifying the Buy rating. (SeeMedtronic Dividend Date and History on TipRanks)

Encouraged by Medtronic’s impressive and expanding product portfolio, Matson believes that the company is expected to witness mid-single-digit revenue growth in 2021. Also, 30 basis points or more of annual operating margin improvement is expected, which might drive the earnings moderately above consensus.

Matson anticipates faster growth of Intersect ENT’s products, especially PROPEL and SINUVA implants, under Medtronic, fueled by a larger sales force and international presence. Moreover, the analyst also observed from Medtronic management’s prior comments that the company was probably planning to pursue more such acquisitions over the next few years.

Consensus among TipRanks’ analysts for Medtronic is a Strong Buy based on 16 Buys and 2 Holds. The average Medtronic price target of $141.82 implies 11.1% upside potential from current levels.

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.


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