On Tuesday, Truist Securities revised its price target for Medtronic Inc. (NYSE:), a global leader in medical technology, services and solutions, announced a price target adjustment to $85 from the previous $88 while maintaining a hold rating on the stock.
The revision comes after examining Medtronic’s earnings outlook and position relative to its industry peers. The new price target is based on a 15x multiple applied to the company’s expected earnings per share (EPS) for calendar year 2025.
This is down slightly from the previous multiple of 15.5x. The reason for this multiple is that it represents a discount to the larger group of similar diversified companies, which typically trade at a multiple of 20x.
The analyst’s decision to apply the discount is based on Medtronic’s average EPS growth forecast, which is below the peer group average. Despite this conservative assessment, the analyst notes that there is potential for the multiple to expand. Such expansion would be contingent on Medtronic providing greater visibility into accelerating its revenue and EPS growth or showing a significant increase in EPS.
The analyst’s comment highlights the potential for Medtronic’s valuation to improve if the company can demonstrate a stronger growth trajectory or beat earnings expectations. Current market sentiment, as reflected in this Hold rating, suggests a cautious but vigilant approach to Medtronic’s stock performance in the near term.
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