Should I buy Medtronic shares in June 2022?

Medtronic plc (NYSE: MDT) shares have weakened more than 4% after the company reported weaker than expected fourth-quarter results.

The company missed estimates with Q4 EPS and Q4 revenue, and the research company Needham downgraded Medtronic from buy to hold.

Medtronic raised the quarterly dividend

Medtronic plc is an American medical device company that tackles people’s most challenging health problems with advanced solutions. Medtronic is based in Ireland for tax purposes, but the company primarily operates in the United States.

Medtronic reported worse than expected fourth-quarter results last week; total revenue has decreased by 1.2% Y/Y to $8.09 billion, while the non-GAAP earnings per share were $1.52 (missed by $0.04).

The weaker results were primarily hit by the extended COVID lockdowns in China and global supply chain challenges. Geoff Martha, CEO of Medtronic, said:

Global supply chain challenges have impacted many of our businesses, and as they arise, our teams have worked quickly to resolve them. While some of our Q4 challenges will persist in the near term, we expect strong improvement in the back half of our fiscal year.

The company’s management updated financial guidance for the full 2023 fiscal year and reported that organic revenue growth should be in the range of 4% to 5%.

The non-GAAP earnings per share should be between $5.53 and $5.65, including a negative impact from foreign currency translation based on recent foreign currency exchange rates.

The research company Needham downgraded Medtronic from buy to hold and reported that its peers are handling a challenging environment more successfully.

Mike Matson, an analyst from Needham, said that fourth-quarter results missed expectations, and it seems that Medtronic returned to its old pattern of poor execution and inconsistent results.

Positive information is that the board of directors declared a $0.68/quarterly share dividend which represents an increase of 7.9% compared with a prior dividend of $0.63. The dividend will be payable on July 15 to stockholders of record as of June 24, 2022.

Fundamentally looking, Medtronic trades at less than fifteen times TTM EBITDA, and with a market capitalization of $131 billion, shares of this company are fairly valued. Medtronic’s 2.75% dividend looks safe, and the current stock price presents an attractive entry point for long-term investors.

Technical analysis

Medtronic shares have weakened more than 4% after the company reported fourth-quarter results, and the risk of further decline still persists.

Data source: tradingview.com

If the price falls below $95 support, it would be a “sell” signal, and we have the open way to $90. On the other side, if the price jumps above $105, the next target could be around $110 or even above.

Summary

Medtronic shares remain under pressure after the company reported weaker than expected fourth-quarter results. Positive information is that the board of directors declared a $0.68/quarterly share dividend, representing an increase of 7.9% compared with a prior dividend of $0.63.

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