Medtronic (MDT): Diabetes Group Expected to Become a Larger Driver of Revenue Growth

With $1.9B in revenue last year, the Diabetes Group at Medtronic represented just 6% of sales. However, management is aiming to grow the segment significantly over the next several years.

The MiniMed 670G is expected to drive Diabetes Group revenue growth throughout fiscal 2018. Launched in early June, management plans to slowly distribute the 670G in a controlled manner in order to ensure that the infrastructure is in place to support the product. Management noted during investor meetings that the controlled launch should lead to slower growth in the first half of the year but ramp up in the back half of the year. Management has guided to 10-12% revenue growth for the Diabetes Group in FY2018.

Given the ramp, there is some uncertainty on where expectations are for Diabetes Group revenue growth throughout the year. Visible Alpha’s data suggests that consensus expectations are for mid-single digit growth in F1Q18, accelerating sequentially up to the mid-teens by F4Q18.

Beyond the near-term rollout, management is confident that their Diabetes Group can grow longer-term. Growth is expected to be driven by management’s launch target of 20 diabetes products (between FY2015 and FY2020). Additionally, the products aim to address both the Type 1 and Type 2 market. As a result, analysts expect Diabetes Group revenue to grow to $2.8 billion over the next four years with essentially double-digit revenue growth.

Go Beyond Consensus. Uncover deeper insights within analyst models. 
Learn more about Visible Alpha.