Medtronic slumps as annual outlook hurt by forex, slow recovery
By Khushi Mandowara and Bhanvi Satija
(Reuters) -Medtronic Plc on Tuesday lowered its full-year outlook for profit and revenue growth, blaming a stronger dollar and a slower-than-anticipated recovery in supply chain disruptions, sending the medical device maker’s shares down nearly 6%.
Rivals including Boston Scientific Corp and Stryker have also recently lowered their full-year profit forecast and cautioned about the persistence of supply chain constraints and the stronger dollar in the near term.
Medtronic lowered its fiscal 2023 adjusted profit forecast range to between $5.25 and $5.30 per share, from $5.53 to $5.65, as it continues to implement expense reductions under an ongoing restructuring plan.
The company expects a 36 cent currency-related headwind to its bottom line for the fiscal year 2024, finance chief Karen Parkhill said.
Investors will continue to take a more cautious stance, given slower growth into year-end in an already challenged macro-environment, J.P. Morgan analyst Robbie Marcus said.
Medtronic cut its revenue growth expectations for fiscal 2023 to 3.5% to 4%, from 4% to 5%. The company said cost-cutting measures will likely offset lower revenue and inflationary pressures in the second half of the year.
Analysts said that Medtronic’s second-quarter performance was a reminder of the challenges that continue to pressure the medical-technology sector.
A slower-than-anticipated recovery in supply chain disruptions impacted Medtronic’s medical surgical business the most, with the unit’s revenue falling 10% to $2.07 billion.
Total revenue for the second quarter ended Oct. 28 came in below analysts’ expectations at $7.59 billion, which was also hurt by a sluggish recovery in non-urgent procedures.
However, Medtronic posted an adjusted profit above estimates at $1.30 per share.
Shares of the Dublin-based company fell to $76.69, hitting their lowest levels since March 2020.
(Reporting by Khushi Mandowara and Bhanvi Satija in Bengaluru; Editing by Maju Samuel)