Medtronic (NYSE:MDT) shares have been double-downgraded to Sell from Buy by UBS due to anticipated near-term sales and EPS downside risk. The new price target is $79 per share, a significant drop from the prior target of $127. The analysts believe that Medtronic’s ongoing transformation will require more time, and lack confidence that the company can achieve sustainable mid-single-digit top-line growth and consistent operating margin improvement.
UBS predicts that Medtronic’s sales will grow at a CAGR of 3.8%, which is lower than the consensus estimate of 4.8%. Additionally, UBS’ survey shows minimal diabetes share gains. It expects that in 2024 and 2025, the company’s EPS will be lower than consensus estimates by low-single-digits and high-single-digits, respectively, mainly due to lower sales. While Medtronic may gain marginal share in some businesses, such as Evolut FX in TAVR (Transcatheter Aortic Valve Replacement), the company is losing share in other areas such as cryo, peripheral, and diabetes.