Medtronic Downgraded at RBC Capital, Shares Down 4%

Medtronic plc (NYSE:MDT) shares closed more than 4% lower yesterday after RBC Capital downgraded the company to Sector Perform from Outperform and lowered its price target to $89 from $102.

According to analysts, there is significant dissatisfaction among investors regarding the way the company's management has handled several issues (e.g. warning letter, supply impact, RDN). Additionally, they believe that the company's recovery has been slower than expected and that it is facing ongoing challenges due to macroeconomic conditions. While the situation may improve in the future, it is unlikely that the company will perform significantly better than its competitors, due to the loss of credibility it has experienced.

The company cut its fiscal 2023 organic growth outlook from approximately 5% in Feb to 1.4-1.6% in Nov due to supply constraints as well as slower recovery in certain sub-segments such as neuromodulation, TAVR, basic coronary PCI, and other general surgery procedures. Full-year EPS outlook was lowered throughout the year as well due to lower organic sales growth, and pressures related to FX, inflation, and supply. The company now expects 2023 EPS to be in the range of $5.25-5.30 (down 5.7-6.6% year-over-year).