Why Medtronic shares sank today

What happened

A wave of price target cuts hit analysts Medtronic (MDT -2.49%) shares on Friday, one trading session after the company posted its latest set of quarterly earnings. Both the market and many forecasters were unimpressed by these things, despite the blows on both the top and bottom. As a result, Medtronic shares lost 2.5% of their value. This compared very unfavorably with a gain of 1.3% Standard & Poor’s 500 Today indicator.

so what

Although Medtronic’s fourth quarter of fiscal 2023 was encouraging, investors tend to look forward rather than backward when valuing stocks. And that was a problem, as the specialist healthcare company’s guidance turned out to be inadequate.

Investors responded to exit the stock, while more bearish analysts shaved off their price targets. One of the cutters was Richard Neuter of Trust Securities, who cut $3 from its appreciation to a new high of $90 a share. Newitter maintained his buy recommendation for the stock as he did so.

A more moderate step was taken by Lee Hambright of Bernstein. It only took $1 off its price target to fall at $99 a share. Hambright is more positive about Medtronic’s future than his counterpart Truist, keeping its Outperformance (Buy) recommendation intact.

What now

It should be noted that other analysts have gone in different directions by either raising Medtronic’s price targets or replicating their current levels and recommendations.

In the latter category it was Deutsche BankPito Chickering’s Pito Chickering, which maintains its hold rating and price target of $87, writes in a new note that “as we look at fourth-quarter results and fiscal 2024 guidance, we believe MDT could be conservative guidance but lack significant cadence and guidance down the street.” He does not shout that the arrow has found its ground yet.”

Eric Volkmann has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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