Medical devices was supposed to be recession-proof, or at least was supposed to be recession-resistant. But we have seen over and over how this notion has not been the case. Medtronic Inc. (NYSE: MDT) today highlighted further evidence that medical technology has to adjust to a new, harsher environment.
The company was presenting data at the J.P. Morgan health careconference and it brought down some of its longer-term forecasts. Itblamed a sluggish market for new implantable defibrillators, but theeconomy is the likely culprit here.
The company still expects earnings growth in the double-digits andit reaffirmed earnings targets for the fiscal April-2009 period.
Medtronic’s prior long-term sales growth over the next five years was 9% to 11%. The company now sees sales growing 5% to 8% for near-term, but put its long-term earningsgrowth target at 10% or more. Its prior growth target was roughly 11%to 14%.
This comes on the heels of its announcement that it plans to purchaseAblation Frontiers for an initial payment of $225 million pluspotential initial payments. With a $36 billion market cap, thatacquisition will hardly be noticed any time soon.
Jon C. Ogg
January 12, 2009