The last quarter earnings for Medtronics added some strength to the stock. Compared with a correction of more than 10% in most stocks, it has remained relatively stable over the past few weeks. It is only 4% below its 52 week high of $53.83 made a few days ago. It is trading above important levels, and sustained improvement in the mood of the market can help it challenge recent highs. The full year guidance of 2014 was raised to $17.1-17.3 billion which indicates expectations of 3% growth. In the last quarter, the company reported revenues & net income of $4.46 billion and $969 million respectively. For the full fiscal year ending April 26, 2013, it reported revenues of $16.59 billion and net income of $3.467 billion. Going by the guidance, the growth in stock is likely to be modest over the next few quarters. Further, the markets have to remain stable to positive. Deeper correction in the market may dampen the overall sentiments and even strong stocks may give way. Medtronic has done well over the years for investors, and the growth in the stock has been backed by fundamentals. However, there was some slowing of growth in the last year. It is trading at around 15 times ttm earnings and the forward P/E is only slightly lower at 12.5. This again indicates that growth expectations are not that robust. Growth in revenues has always been supported by launch of innovative products by the company. Innovation is the key for success in the sector and even smaller medical device companies like PLC Systems (PLCSF) are showing promise based on innovative products. Majority of sales of Medtronics come from US and Europe, but emerging markets are also expected to contribute more in the years to come. Emerging markets was the fastest growing region for the company with 21% growth in revenues in 2012.
