Morgan Stanley Upgrades Medtronic On Exposure To COVID-19 Recovery

Medtronic PLC MDT is well-positioned for a COVID-19 recovery and has upside to the consensus estimates for fiscal 2022, according to Morgan Stanley.

The Medtronic Analyst: David Lewis upgraded Medtronic from Equal-Weight to Overweight and raised the price target from $120 to $140.

The Medtronic Thesis: Lagging implantable devices are expected to outperform, with risks being abated by vaccines, better hospital protocols, the availability of personal protective equipment and COVID-19 testing, Lewis said in the upgrade note.

“We see a winning formula for Medtronic, with the company well aligned to our pro-recovery thesis and a material disconnect between Street numbers and the improving post-COVID trajectory,” the analyst said. 

"Net, we model 10% FY22/FY19 revenue growth, and Gross and Operating Margins flat in FY22 relative to FY19, which look conservative in light of CFO Karen Parkhill's guidance for a return to normalized underlying growth and Operating Margins in F4Q21."

Morgan Stanley sees reason to be more bullish about Medtronic's pipeline and the turnaround required "to make the company a structural outperformer," Lewis said. 

MDT Price Action: Shares of Medtronic were up 2.39% at $114.75 at last check Tuesday. 

Photo courtesy of Medtronic.