Medtronic raises profit forecast again, bets on new products

(Reuters) - Medtronic Plc's MDT.N incoming chief executive officer said on Tuesday product launches and smaller acquisitions remained priorities after the medical device maker raised its 2020 profit forecast for the second time.

The world’s largest standalone medical device maker has been benefiting from recent purchases aimed at beefing up its minimally invasive and robotic surgery device businesses against the backdrop of slowing growth in cardiac and vascular segment.

“We will be laser-focused on getting our organic revenue growth rates up, getting more aggressive with tuck-in M&A and being decisive with capital allocation to the highest growth segments,” Geoff Martha said on a post-earnings conference call.

Martha will in April succeed longtime CEO Omar Ishrak, who led the $42.9 billion purchase of rival Covidien and the Israeli robotics company Mazor Robotics.

Medtronic has lined up a raft of product launches including pacemaker Micra AV and the MiniMed 780G diabetes pump.

Shares of the Dublin-based company were up about 1% at $111.98.

The company reported a 4.6% rise in sales in its minimally invasive therapies business, which makes surgical instruments and endoscopy products, in the second quarter ended Oct. 25.

The restorative therapies business generated $2.11 billion in revenue, ahead of the consensus estimate of $2.06 billion, boosted by the addition of robotic surgery system, Mazor X.

Growth in these units helped offset the slight weakness in its biggest unit that makes pace-makers, heart valves and stents.

Medtronic’s cardiac and vascular business missed estimates for revenue in the quarter, bringing in $2.86 billion, compared with estimates of $2.87 billion.

Net sales rose 3% to $7.71 billion, above estimates of $7.66 billion.

Excluding items, the company earned $1.31 per share, topping analysts’ average estimate of $1.28.

Medtronic said it now expects 2020 adjusted profit to be in the range of $5.57 to $5.63 per share, up from the prior forecast of $5.54 to $5.60. Analysts were expecting full-year earnings of $5.56 per share.

However, the company reiterated its organic sales growth guidance for 2020 at about 4%, which several analysts called conservative.

The reiterated guidance is conservative given a solid setup into an accelerating second half of 2020 and sets the stage for further beat and raise quarters into 2021, J.P. Morgan analyst Robbie Marcus said.

Reporting by Manojna Maddipatla and Dania Nadeem in Bengaluru; Editing by Sriraj Kalluvila