Story updated at 10 a.m. to reflect market activity.
Shares of Medtronic fell 0.6% to $65.57 in morning trading.
The analyst firm set a price target of $68 for the medical equipment maker. Medtronic lacks near-term catalysts, according to Sterne Agee analyst Gregory P. Chodaczek.
"We view Medtronic as the most diversified company in the Medical Technology space, with leading products across each of its core business segments," Chodaczek wrote. "With that said, we do not foresee any new individual product launches that will generate significant revenue growth due to the vast scale of the company's product offerings."
Sterne Agee expects Medtronic to report earnings of 96 cents a share in the fiscal second quarter. The analyst firm expects earnings of $4.02 for full year 2015, and $4.36 a share for 2016.
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, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 4.7%. 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.
- MDT's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.25 is very high and demonstrates very strong liquidity.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The gross profit margin for MEDTRONIC INC is currently very high, coming in at 77.14%. Regardless of MDT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MDT's net profit margin of 20.38% compares favorably to the industry average.
- You can view the full analysis from the report here: MDT Ratings Report
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