A faster than expected recovery in the aftermath of COVID-19 affirms Medtronic PLC (NYSE:MDT)'s long term prospects. The medical devices company was one of the hardest hit as the pandemic took a toll on its core business as patients suspended a number of procedures.
Fast forward, revenue growth has improved significantly as most healthcare facilities bounced back to normalcy, having found a way to operate amid the COVID-19 pandemic. The company’s pipeline is also advancing, leaving the company well-positioned to accelerate growth over the medium and long term.
The coronavirus pandemic had weighed heavily on medical device companies as patients delayed some procedures on fears of contracting the virus while at the hospital. Intuitive Surgical is one of the hardest hit, having registered a double digit drop in the bottom line and a 4% slid in sales. For Medtronic, it was a whole different ball game in the quarter.
Revenue Growth
While earnings did drop 22% to $1.02 a share in the second quarter, they beat consensus estimates of 80 cents a share. Revenues also topped an estimate of $7.08 billion on coming in at $7.65 billion. The better than expected results could be attributed to an increase in procedure volumes in hospitals, which increased the demand for medical devices.
Revenue from minimally invasive therapies was up 6.7% to $2.29 billion. However, sales for diabetes devices were down 3.7% to $574 million as Medtronic continued to face additional competitors for insulin pumps and continuous insulin pumps. However, the company reported sequential improvement in all its businesses and geographies, affirming the faster than expected recovery.
The stellar financial results should continue to support the impressive run that has seen the stock bottom out from its 2020 lows. Strengthened investor confidence has seen the stock rally in recent months, conversely, erase all the losses accrued at the start of the year. Given the solid underlying fundamentals supporting further upside action, it is likely the stock could rally past its 2020 highs.