Morgan Stanley: Medtronic Shows Weakness Where Expected

According to a research report published today by Morgan Stanley, Medtronic's

results were generally in-line, but there was weakness in US ICDs and Spine, which was expected. “ICD and Spine combined to decline by 9% constant currency while non-ICD/Spine grew by 9%. The focus on the call likely centers on the outlook and share expectations for the US ICD market, as well as any early thoughts or implications for FY13 guidance. We estimate that organic revenue growth was 2% vs. 1.4% in F2Q12, on a comp that was 30 bps more difficult. Sales in ICDs and Spine each missed our estimates by $40mn. EPS at $0.84 matched our estimate and consensus, with lower than expected COGS offset by higher SG&A and a lower tax rate. The company reiterated its revenue outlook and tightened its FY2012 EPS guidance to $3.44 to $3.47 from $3.43 to $3.50,” Morgan Stanley said in the report. Morgan Stanley maintains its Equal-Weight rating on Medtronic, which is currently trading at $38.65.