Will This Downgrade Hurt Medtronic (MDT) Stock Today?

Story updated at 9:50 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Medtronic (MDT) was downgraded to "neutral" from "overweight" by JP Morgan Monday.

Medtronic stock fell 3.1% to $57,34 in morning trading.

The firm set a price target of $64 for the company. JP Morgan analysts wrote that Medtronic's CoreValue injunction adds significant risk to the model.

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Separately, TheStreet Ratings team rates MEDTRONIC INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate MEDTRONIC INC (MDT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MDT's revenue growth has slightly outpaced the industry average of 2.7%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, MDT's share price has jumped by 27.22%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MDT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has slightly increased to $1,612.00 million or 5.42% when compared to the same quarter last year. In addition, MEDTRONIC INC has also modestly surpassed the industry average cash flow growth rate of 3.40%.
  • MEDTRONIC INC's earnings per share declined by 22.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MEDTRONIC INC increased its bottom line by earning $3.38 versus $3.24 in the prior year. This year, the market expects an improvement in earnings ($3.82 versus $3.38).
  • You can view the full analysis from the report here: MDT Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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