Medical device company Medtronic plc. (NYSE:MDT) recently revealed that it has entered into a definitive agreement to acquire Affera, a medical technology company. The financial terms of the deal have not been disclosed so far.
Following the news, shares of the company gained marginally to close at $105.62 in Monday’s extended trading session.
Strategic Impact
With this buyout, Medtronic will gain access to Affera’s expertise in the cardiac ablation products and accessories space. Cardiac ablation products are used for the effective treatment of patients with cardiac arrhythmias.
Further, the combination of Medtronic’s existing atrial and ventricular arrhythmia disease management portfolio with Affera’s suite of solutions will allow the company to offer effective cardiac ablation solutions to improve patient outcomes.
Financially, Medtronic expects the acquisition to be less than 1% dilutive to Medtronic’s adjusted earnings per share in each of the first three years, and neutral to accretive thereafter. The company forecasts a dilution of roughly 5 cents in the first two years and approximately 3 cents in the third year.
Management Commentary
The President of the Cardiac Ablation Solutions (CAS) business at Medtronic, Rebecca Seidel, said, “Bringing Affera into our organization, with our established footprint in the cardiac ablation space, will strengthen our ability to provide innovative therapies and enable Medtronic entry into additional EP technology segments, such as mapping and navigation, for the first time.”
Wall Street’s Take
On January 10, Piper Sandler analyst Matthew O’Brien reiterated a Hold rating on the stock with a price target of $110, which implies upside potential of 4.2% from current levels.
According to the analyst, the company’s acquisition of Affera can prove to be beneficial in the long run. However, the analyst remains skeptical of the company achieving its own financial targets.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 11 Buys and 6 Holds. The average Medtronic price target of $130.94 implies that the stock has upside potential of 24% from current levels. Shares have declined about 10.9% over the past year.
Positive Sentiment
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Medtronic with 10.09% of investors on TipRanks increasing their exposure to MDT stock over the past 30 days.
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