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UPDATE: Bank Of America Reiterates On Medtronic


In a report published Friday, Bank of America analyst Bob Hopkins reiterated a Buy rating on Medtronic (NYSE: MDT), and raised the price target from $80.00 to $85.00.

In the report, Bank of America noted, “Following the debt financing of the COV deal earlier this week we are adjusting our model and FCF analysis. As our analysis in this note highlights, even with $37bln in debt at close MDT can hit its 2018 leverage targets in our view with little to no debt pay down given the 8% EBITDA growth we forecast, which leaves MDT with roughly $8bln in FCF to allocate to dividends, buybacks or M&A. With about $5bln of that FCF untrapped, we believe MDT has the flexibility to move to a 40-50% dividend payout ratio and deliver double digit total returns for years to come. MDT has had a strong run of late, but we see the potential for another 15% upside based on our view that an increasing dividend and consistent 7-10% EPS growth (MDT has not missed a quarter since the current CEO took over 3 years ago) can justify a 16x multiple on our 2016 estimate. With the financing terms now set, our fiscal 2016-2018 cash EPS estimates move to $4.89, $5.46 and $5.97. Our CY2016 estimate is $5.27. We are raising our PO to $85.”

Medtronic closed on Thursday at $73.94.

Latest Ratings for MDT

Sep 2020Wolfe ResearchInitiates Coverage OnPeer Perform
Aug 2020Credit SuisseMaintainsOutperform
Aug 2020Morgan StanleyMaintainsEqual-Weight

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