Time To Buy Medtronic? Watch Diabetes Segment Transformation
Medtronic is confident of filling the supply-demand gap in its diabetes franchise by end of FY 2018.
The company plans to launch next generation professional CGM device for type 2 diabetes patients in fiscal year 2018.
Partnerships with clinics and hospitals for diabetes management and prevention are expected to help Medtronic offer integrated care to patients.
The company has also entered intofavorable relationships with major payers in USA.
However, investors should be aware ofcertain business risks of the diabetes segment.
Medtronic (MDT) is one of the few medical device companies with product portfolio vastly diversified across therapeutic areas and geographies. The inversion deal with Ireland based Covidien has not only helped the company to shift to lower-tax base but has also vastly expanded the company’s geographic and therapeutic footprint. And then the recently concluded divestiture deal with Cardinal Health of non-core and low growth assets for a consideration of $6.1 billion has truly landed this company in an enviable spot.
Once Medtronic manages to put to rest the supply constraints it is facing in its diabetes business, I believe that the company can easily reach the 12-month consensus target price for Medtronic, of around $91.11.
The diabetes group currently contributes only about 6.3% to Medtronic’s total revenues. However, it is on a cusp of major transformation, one that is capable of lifting or dragging both investor sentiment as well as share price of this diversified medical device player. It should be noted that the lower-than-anticipated Continue reading