Sundry Photography/iStock Editorial via Getty Images Medtronic ( NYSE: MDT ) shares trended higher on Thursday after UBS upgraded the MedTech giant to Neutral from its previous rating of Sell, citing a potential turnaround in the company's diabetes segment. The upgrade follows Abbott Laboratories' ( ABT ) recent partnership to integrate its continuous glucose monitoring system with Medtronic's ( MDT ) insulin delivery systems (CGM). UBS analyst Danielle Antalffy argued that diabetes, which accounted for slightly less than 10% of MDT's sales, represented one of the company's higher-end growth markets, making it critical to Medtronic's ( MDT ) top-line growth.
The Abbott-Medtronic deal "makes MDT more competitive from a new patient to pump perspective—an area where they have not been competitive for a decade," the analyst added. Antalffy raised her price target on the stock to $90 from $76, assuming that her above-consensus estimates for the company's diabetes segment will offset potential softness in other areas. The analyst notes a balanced risk-reward setup for the stock ahead of MDT's Q1 FY24 financials scheduled for next Tuesday in the premarket.
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