Medtronic raises fiscal 2024 forecast on strong sales of surgical, diabetes devices

By Khushi Mandowara and Christy Santhosh

(Reuters) - Medtronic beat second-quarter profit and revenue estimates and raised its annual earnings forecast on Tuesday, banking on strong sales in its surgical and diabetes units, sending shares of the company up about 2% in premarket trading.

Medical device makers are seeing higher demand for their products due to a steady recovery in surgical procedures that were deferred during the pandemic, especially by older adults, as well as easing staff shortages at hospitals.

Medtronic, which makes pacemakers, catheters and tools used in heart and gastrointestinal surgeries, joins Abbott Laboratories and Boston Scientific, which have also benefited from soaring demand for non-urgent surgeries.

Sales at Medtronic's heart devices unit, its biggest revenue driver, increased 5.9%, to $2.92 billion, largely in line with estimates.

Medtronic's heart valve replacement device has seen high single-digit growth but was still lagging behind rival Edwards Lifesciences, said Barclays analyst Matt Miksic.

Tuesday's earnings raise the question of whether Medtronic's structural heart unit is again gaining market share in the US, Miksic said.

Sales at the company's medical surgical unit were at $2.14 billion, compared with analysts' average estimate of $2.12 billion. For its diabetes unit, sales stood at $610 million, beating an estimate of $588.4 million.

The company now expects profit between $5.13 per share and $5.19 per share for the fiscal year ending in April 2024, above the $5.08 per share to $5.16 per share range expected previously.

It also increased its fiscal 2024 organic revenue growth forecast to 4.75%, versus the previous expectation of 4.5%.

On an adjusted basis, Dublin-based Medtronic reported a profit of $1.25 per share for the quarter ended Oct. 27, beating analysts' average estimate of $1.18 per share, according to LSEG data.

(Reporting by Khushi Mandowara and Christy Santhosh in Bengaluru; Editing by Pooja Desai)