Medtronic upgraded at UBS on diabetes turnaround

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.