by Ian Harvey
April 19, 2020
Medtronic, medical device maker, is helping to fight the battle against the COVID-19 virus, by increasing their production of their coveted ventilators.
And Members of Stock Options Made Easy “Armchair Trader Series” and “Mentorship Program” are along for the profit ride – up 112.5% and 74.5%, using CALL OPTIONS.
Where to now?
An option call trade, based on the need for ventilators to battle the coronavirus, was recommended to Stock Options Made Easy “Armchair Trader Members” on Tuesday, April 07, 2020, bringing the potential profit to 112.5% as of Friday.
The COVID-19 pandemic has taken the U.S. economy from near-record-low unemployment to mass layoffs and firings.
Medtronic makes medical devices, including pacemakers, surgical devices, implants and diabetes pumps. The stock was down 24% this year, in part because these products are expensive, and you don’t use their products unless you need to. So the recessionary environment, the delay in elective surgeries as health-care providers’ focus on COVID-19 and fear of going to a hospital are all combining to hurt sales.
But, the novel coronavirus crisis is creating a tremendous need for ventilators. And Medtronic is one company that makes those coveted devices. Further, the company’s sales for its cardiac and vascular unit, which houses its ventilator business, should climb meaningfully during the crisis. This sales spike should boost Medtronic stock.
The company’s ventilators cost between $5,000 and $50,000 each. Given the high price of Medtronic’s ventilators, there’s an excellent chance that the company’s profit margin on them is high.
In mid-March, Medtronic said it had increased production of ventilators by more than 40% and is on track to more than double its capacity to manufacture and supply ventilators. It has also publicly shared the design specifications for one of its ventilator models so that participants across industries can evaluate options for rapid scale-up of production.
Friday saw Medtronic stock increase by $7.63, up 7.97% to $103.33.
Approval for Ventilator.....
Wednesday before last saw MDT win the U.S. Food and Drug Administration's approval to immediately market its ventilator, which it plans to launch by May, to meet increased demand due to the coronavirus outbreak.
The ventilator, PB560, is currently sold in 35 countries at an average selling price of under $10,000, the company said.
It expects to ramp up production by nearly five-fold to more than 1,000 ventilators per week by June-end, and make over 25,000 devices available over the next six months.Analysts Are Upbeat.....
Shares of Medtronic have earned a consensus recommendation of “Buy” from the twenty-seven research firms that are covering the stock, MarketBeat.com reports. Two equities research analysts have rated the stock with a sell rating, four have assigned a hold rating and twenty-one have assigned a buy rating to the company. The average 12 month price objective among brokers that have issued ratings on the stock in the last year is $122.00.
MDT’s next earnings release will be May 21, 2020. In that report, analysts expect MDT to post earnings of $1.40 per share. This would mark a year-over-year decline of 9.09%. Meanwhile, our latest consensus estimate is calling for revenue of $7.88 billion, down 3.28% from the prior-year quarter.
Expect increases in the revenue of the company’s cardiac and vascular group to offset and possibly slightly exceed the revenue losses of its other units. As a result, expect the entire company’s revenue in the first and second quarters to be anywhere from 10% below to 10% above its normal levels.
Moreover, after the crisis is over, expect it to benefit from a huge surge in elective surgeries and continued high demand for its ventilators as governments and hospitals around the world look to stockpile them for next fall.
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An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!