The weakness of the Medtronic share offers a great opportunity

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The novel corona virus crisis creates an enormous need for fans. And Medtronic (NYSE:MDT) is a company that manufactures these coveted devices. In addition, the company’s revenue for its cardiovascular department, where the ventilation business is located, is likely to rise significantly during the crisis. This increase in sales should boost the Medtronic share. “Data-reactid =” 12 “> The novel corona virus crisis creates an enormous need for ventilators Medtronic (NYSE:MDT) is a company that manufactures these coveted devices. In addition, the company’s revenue for its cardiovascular department, where the ventilation business is located, is likely to rise significantly during the crisis. This increase in sales should boost the Medtronic share.

To own 10 buy and hold shares forever

To own 10 buy and hold shares forever

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The company’s ventilators cost between $ 5,000 and $ 50,000 each. Given the high price of Medtronic ventilators, there is an excellent chance that the company’s profit margin will be high. And I couldn’t find evidence that Medtronic had agreed to lower or limit the price of its ventilators. However, Medtronic shared the design plan for its ventilators.

As a result, higher demand for ventilators should improve corporate earnings during the crisis.

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In addition, Medtronic’s customer base consists of hospitals and doctors. And hospitals are open to business during the coronavirus crisis. In addition, the country’s hospitals are receiving a total of $ 100 billion from the federal government, giving them enough money to buy Medtronic’s products.

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As many analysts have found, doctors ‘offices will cancel or postpone some of their patients’ elective operations. This will reduce the demand for some of the Medtronic products. However, a decline in elective operations will not significantly affect Medtronic’s overall demand.

For example, historically, its cardiovascular unit generates almost 38% of its sales. Many of the operations that fall under this unit are not eligible. The coronavirus also affects the heart and lungs.

Diabetes, which accounts for almost 8% of the company’s sales, can also be life-threatening. The largest wildcard is the company’s Restorative Therapies Department, which “includes devices and implants for diseases of the spine, musculoskeletal system, brain, and nerves,” and generates 27% of Medtronic’s sales.

Medtronic’s minimally invasive therapy unit, which generates almost 28% of its sales, is another mixed bag. This is because the group’s products are used for both elective procedures such as gastrointestinal surgery and non-elective procedures such as lung health procedures. However, since the group of minimally invasive therapies sells products that are used for pulmonary health and respiratory procedures, as well as patient monitoring, revenue is unlikely to decrease significantly during the crisis.

It is also important to note that many parts of the country are not yet seriously affected by the corona virus. For example, on April 2, Nebraska had 246 cases, Montana 227 cases, and West Virginia 217 cases.

Why is that important? Election operations will continue as usual in some countries with less impact.

The conclusion from Medtronic Stock

With all of these points in mind, I expect sales increases in the heart and vascular group of the company to offset and possibly slightly exceed the sales losses of the other units. As a result, I expect the company’s overall sales to be between 10% and 10% above normal in the first and second quarters.

In addition, after the crisis has ended, I expect election operations to increase enormously and demand for ventilators will continue to be high as governments and hospitals around the world try to keep them for next fall.

However, the MDT share has fallen by more than 20% in the last three months. The forward price-earnings ratio is now average for the stock market. Therefore, investors should buy stocks now.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "At the time of this writing, Larry Ramer held shares in Medtronic. Larry Ramer has been doing research for 13 years and writing articles about US stocks. He worked for The Fly and Israel’s largest business newspaper Globes. Larry started writing columns for InvestorPlace in 2015. His extremely successful contrary favorites included GE, solar stocks and Snap. You can reach him on StockTwits at @larryramer.“data-reactid =” 43 “>At the time of this writing, Larry Ramer held shares in Medtronic. Larry Ramer has been doing research for 13 years and writing articles about US stocks. He worked for The Fly and Israel’s largest business newspaper Globes. Larry started writing columns for InvestorPlace in 2015. His extremely successful contrary favorites included GE, solar stocks and Snap. You can reach him on StockTwits at @larryramer.

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