Medtronic plc (NYSE: MDT) is scheduled to report first-quarter fiscal 2025 results on Aug 20, before the opening bell.
In the last reported quarter, the company's adjusted earnings of $1.46 exceeded the Zacks Consensus Estimate by 0.69%. Medtronic beat estimates in each of the trailing four quarters, the average surprise being 4.48%.
The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $7.90 billion, suggesting growth of 2.5% year over year. The consensus estimate for first-quarter earnings is pegged at $1.20 per share, indicating no change on a year-over-year basis.
Estimate Trend
Earnings estimates for Medtronic have remained unchanged at $1.20 per share for the fiscal first quarter over the past 60 days.
Image Source: Zacks Investment Research
Let's look at how things have shaped up for Medtronic before the announcement.
Mixed Trend Ahead of Q1 Earnings
Since the past several quarters, Medtronic's earnings growth has been held back by headwinds like cost escalation and currency impacts. Although inflation stabilized a bit during the fiscal fourth quarter, it is still higher than the historical trend. The continued rise in raw material and labor costs, as well as oil price volatility, has been denting the company's profit. Further, a rising interest rate leading to increasing borrowing costs is concerning. In the fourth quarter of fiscal 2024, gross margin contracted 56 basis points to 64.6% on a 2.1% rise in the cost of revenues. Further, selling, general and administrative expenses rose 5.7% year over year. Adjusted operating margin contracted 251 bps year over year to 24.5%.
Like its peers, the impact of the present geopolitical situation, including sanctions and other measures being imposed in response to the Russia-Ukraine conflict, may have impacted fiscal first-quarter profits.
Added to this, unfavorable currency movements have been a major dampener over the last few quarters, as in the case of other important MedTech players too. Medtronic expects its fiscal 2025 first-quarter revenues to reflect an unfavorable impact of $85 million to $135 million from currency translation.
Despite these challenges, Medtronic has consistently showcased the resilience of its underlying business fundamentals, delivering mid-single-digit organic revenue growth for several quarters in a row. While ...
