UPDATE: Credit Suisse Downgrades Medtronic to Neutral on Valuation
In a report published Thursday, Credit Suisse analyst Bruce Nudell downgraded the rating on Medtronic (NYSE: MDT) from Outperform to Neutral, but raised the price target from $50.00 to $53.00.
In the report, Nudell noted, “The stock trades at 12.5X our C2014 EPS slightly above a mean of 10.9X over the past 5 years. We see a premium to recent historical levels as appropriate given what we view as a more stable top-line for the company. However, we believe valuation now fairly reflects our estimates of ~3-4% top-line growth & EPS growth in the ~7-8% range (postFY2014). To the extent MDT is confident enough to guide to the 4.5% CC sales growth aspirations for FY14 it outlined in January & / or effectively deploy a portion of its ~$4B/year in FCF toward accretive M&A we see upside to our 3.7% CC FY14 sales growth estimate & risk to our Neutral rating.”
Medtronic closed on Wednesday at $50.01.
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