Healthcare stocks are in focus these days and Medtronic (Medtronic Stock Quote, Chart, News NYSE:MDT) should be on your radar, says portfolio manager Darren Sissons, who says despite the pullback over the past two months, the medical device company will keep rewarding investors.
“Medtronic is one of those companies, I think it has grown its dividend for 28 consecutive years,” said Sissons of Campbell Lee & Ross, who spoke to BNN Bloomberg on Monday. “But like a lot of companies not all of its business is going to be firing. It’s a healthcare conglomerate and historically it has grown by a combination of tuck-in acquisitions and organic growth in its end markets.”
Medtronic got hit hard with the rest of the market in late February but has done a good job bouncing back.
So far the stock is down about 13 per cent over the COVID-19-caused meltdown period, stretching back to about February 21. Before that, MDT had been on a nice run stretching back to April 2019 where it rose about 44 per cent, thanks to consistent if not spectacular revenue growth and a diversified business.
Minnesota-based Medtronic makes medical devices primarily for cardiac and vascular needs with items such as heart valves and pacemakers, along with minimally-invasive therapies such as respiratory devices and scopes. The company also has a restorative therapies segment and a diabetes group for insulin management technologies.
In the current COVID-19 environment, Medtronic is one of the biggest suppliers of ventilators. The company said earlier this month that it’s pushing production of ventilators to about 1,000 devices per month by June from its current level of 300 per month, while in late March Medtronic shared its design specifications for the Puritan Bennett 560 ventilator in aim of spurring production of ventilators.
Medtronic also announced late in March new patient monitoring devices specifically aimed at respiratory issues connected to COVID-19.
“With the rapid spread of COVID-19, we know that alternative approaches to screening, disease monitoring, and patient education are urgently needed to reduce additional population exposure to the virus and ease the burden on health care providers and facilities,” said Sheri Dodd of Medtronic, in a press release on March 27. “Using technology for self-reported symptom monitoring may play an important role in slowing the spread of the disease and helping escalate patient needs to their provider when appropriate.”
Sissons said Medtronic will come out of the COVID-19 crisis and could do well with its diagnostic and monitoring tech.
“0n the other side of the COVID-19 pandemic, I think the whole diagnostics space is going to be an interesting one,” Sissons says. “If you own it, I wouldn’t sell it. I think the dividend is reasonably safe and the last time I checked the balance sheet was quite reasonable.”
“Ultimately, I think Medtronic will be buyers of some weaker companies moving forward,” he says. “You could see some oscillation in the share price, particularly if the markets move south, but if it does, perhaps that’s an opportunity to buy some more.”