Aug 02, 2017

Medtronic plc (NYSE: MDT) Zacks Rank 4-Sell

$83.52 USD ( As of 08/01/17 ) Style:Value: Growth: Momentum: VGM:

Data Overview Summary

52 Week High-Low $89.72 - $69.35 Over the last three months, Medtronic has been observed to outperform the broader
20 Day Average Volume 4,154,655
industry. All of its major business groups continue to contribute to solid top-line growth
which highlighted sustainability across groups and regions, in addition to displaying
Beta 1.02
successful integration and achievement of synergy targets. We are also encouraged
Market Cap 113.51 B by the solid growth trend, continuing in the U.S. as well as the healthy global
Dividend / Div Yld $1.84 / 2.20% acceptance of its advanced therapies. Apart from product innovation, Medtronic is
Industry Medical - Products
focusing on geographical diversification of business. An impressive fiscal 2018
guidance also indicates continuance of this strong run going ahead. The company's
Industry Rank 117 / 265 (Top 44%)
last reported fourth quarter fiscal 2017 earnings were also impressive. Yet, escalating
Current Ratio 1.75 costs and expenses are weighing on margins. Also, unfavorable foreign exchange
Debt/Capital 33.96% continues to remain a drag.
Net Margin 13.56%

Price/Book (P/B) 2.28 Elements of the Zacks Rank

Price/Cash Flow (P/CF) 17.05
Agreement Estimate Revisions (60 days)
Earnings Yield 5.88%

Debt/Equity 0.51
100% 100% 100% 100%
Value Score
P/E (F1) 16.91
Q1 (Current Qtr) Q2 (Next Qtr) F1 (Current Year) F2 (Next Year)
P/E (F1) Rel to Industry 0.46
Revisions: 1 Revisions: 1 Revisions: 1 Revisions: 2
PEG Ratio 2.31 Up: 1 Down: 0 Up: 0 Down: 1 Up: 0 Down: 1 Up: 0 Down: 2

P/S (F1) 3.64

P/S (TTM) 3.82 Magnitude Consensus Estimate Trend (60 days)

P/CFO 17.05

P/CFO Rel to Industry 18.45

EV/EDITDA Annual 15.22

Growth Score 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current

Days Days Days Days Days Days Days Days Days Days Days Days
Proj. EPS Growth (F1/F0) 7.88%
Q1 0% Q2 0% F1 -0.20% F2 0%
Hist. EPS Growth (Q0/Q-1) 1.32

Qtr CFO Growth -3.73

Upside Zacks Consensus Estimate vs. Most Accurate Estimate
2 Yr CFO Growth 12.43

Return on Equity (ROE) 12.49%

(NI - CFO) / Total Assets -2.63

Asset Turnover 0.30

Most Accurate: 1.08 Most Accurate: 1.14 Most Accurate: 4.91 Most Accurate: 5.30
Zacks Consensus: 1.08 Zacks Consensus: 1.16 Zacks Consensus: 4.94 Zacks Consensus: 5.38
Momentum Score
Q1 0.00% Q2 -1.72% F1 -0.61% F2 -1.49%
1 week Volume change 16.67%

1 week Price Cng Rel to Industry -0.56%

Surprise Reported Earnings History
(F1) EPS Est 1 week change -0.03%

(F1) EPS Est 4 week change -0.05%

(F1) EPS Est 12 week change -0.02%

(Q1) EPS Est 1 week change 7.41%

Reported: 1.33 Reported: 1.12 Reported: 1.12 Reported: 1.03 Average 4 Qtr
Surprise
Estimate: 1.31 Estimate: 1.11 Estimate: 1.11 Estimate: 1.01
Q End 04/17 Q End 01/17 Q End 10/16 Q End 07/16

© 2017 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
 The data on the front page and all the charts in the report represent market data as of 08/01/17, while the report's text is as of
07/31/2017

Overview
On Jan 26, 2015, Medtronic, Inc. (the legacy NYSE-listed parent
company, incorporated in Minnesota) acquired Ireland-based
Covidien plc for cash-and-stock of $49.9 billion. The acquisition
resulted in the formation of a new holding company incorporated in
Ireland – Medtronic plc (the new Irish tax resident, NYSE-listed
parent company holding both the legacy Medtronic and Covidien).

Per the terms of this agreement, Medtronic, Inc. and Covidien plc
have now become wholly-owned subsidiaries of the new combined
holding company – Medtronic plc, with its principal executive offices
based in Ireland. However, the combined company's operational
headquarters will remain in Minnesota.

The combined business currently operates in 4 major groups, viz.

Cardiac & Vascular Group (CVG) (35.1% of total revenues in the
third quarter), Minimally Invasive Therapies Group (MITG)
(formerly referred to as the Covidien Group) (33.7%), Restorative
Therapies Group (RTG) (24.9%) and Diabetes Group (6.3%).

CVG comprises Cardiac Rhythm & Heart Failure, Coronary &

Structural Heart, and Aortic & Peripheral Vascular divisions. MITG
was formed following the completion of the Covidien acquisition and
includes both the Surgical Solutions division and the Patient
Monitoring & Recovery division, formerly referred to as Medical Care Solutions by Covidien prior to the takeover.

RTG includes the Spine, Neuromodulation, Surgical Technologies, and Neurovascular segments while the Diabetes Group includes the
Intensive Insulin Management, Non-Intensive Diabetes Therapies, and Diabetes Services & Solutions divisions.

Notably, the legacy Medtronic used to derive revenues from 2 broad groups – Cardiac and Vascular Group and Restorative Therapies
Group.

Zacks Equity Research: MDT www.zacks.com Page 2 of 10

 Reasons To Sell:
Exposure to currency movement: With Medtronic recording a significant percentage Headwinds like
of its sales from the international market, it remains highly exposed to currency unfavorable currency
fluctuation. Unfavorable currency movements have been a major dampener over the movement and global
last few quarters. Although the severity of this impact diminished during the first quarter, economic uncertainties
we can hardly rule out the possibility of unfavorable currency impact in the future. In the continue to adversely
reported quarter, foreign currency translation had a negative $37 million impact on affect Medtronic. Also,
revenue and $0.02 per share adverse impact on earnings. With the trend expected to several legal and
linger, the company’s revenues may be be hit by fluctuations in foreign exchange regulatory issues are
rates, going forward. Considering this impact, for fiscal 2018, Medtronic expects intimidating in the short
currency headwind to the tune of approximately $0.05 to $0.10 on earnings, including a term.
negative impact of approximately $0.03 to $0.05 in the first quarter based on current
exchange rates.

Regulatory issues hampering growth: In May 2015, the U.S. Food and Drug Administration (FDA) filed a consent decree against
Medtronic, the company’s CEO Omar Ishrak and neuromodulation divisional head, Thomas M. Tefft. The consent decree was
based on Medtronic repeatedly failing to correct certain violations related to the manufacture of Synchromed II Implantable Infusion
Pump Systems – a device used to treat primary or metastatic cancer, chronic pain and severe spasticity. These violations
determined on grounds of quality control and manufacturing were arrived at during 2006–2013, in the course of five FDA inspections
at Medtronic’s Minnesota plant. Subsequently, three warning letters were issued in this regard. The consent decree now requires
Medtronic to halt the manufacturing, designing and distribution of new Synchromed II Implantable Infusion Pump Systems barring
certain cases (when a physician decides that the Synchromed II Implantable Infusion Pump System is medically necessary for
treatment). Although Medtronic is currently working on improving the quality, the consent decree will remain in effect till the FDA is
convinced that Medtronic has met all the provisions listed therein.

Competitive landscape: The presence of a large number of players has made the medical devices market highly competitive.
Medtronic earns the majority of revenues from CRDM, Spinal and Cardio Vascular segments. The company faces intense
competition in the CRDM segment from players such as Boston Scientific Corporation, and St. Jude Medical. Players such as
Johnson & Johnson, Stryker Corporation, Zimmer and NuVasive have intensified competition particularly in the Spinal segment.

Economic uncertainty: Macroeconomic conditions in many of the developed countries have led to reduction in healthcare budgets
and increased pressure on utilization. This leads to fewer procedures, a trend that is expected to continue in the near future and
affect revenue growth at the company.

Risks
Price Movement: Over the last three months, Medtronic has been observed to outperform the Zacks categorized Medical
Product industry. As per the last share price movement, overall the company gained 10.4%, as compared to the 9.7% gain of the
broader industry over this period. All of its major business groups continue to contribute to solid top-line growth which highlighted
sustainability across groups and regions, in addition to displaying successful integration and achievement of synergy targets. We
are also encouraged by the solid growth trend, continuing in the U.S. as well as the healthy global acceptance of its advanced
therapies. Apart from product innovation, Medtronic is focusing on geographical diversification of business. An impressive fiscal
2018 guidance also indicates continuance of this strong run going ahead. The company's last reported fourth quarter fiscal 2017
earnings were also impressive.

Divestment of Non-core Business to Add Value: Medtronic’s latest decision to divest its Patient Care, Deep Vein Thrombosis,
and Nutritional Insufficiency businesses (within the Patient Monitoring & Recovery division) within the broader MITG, aligns with
the company’s disciplined portfolio management strategy. According to the company, these businesses mentioned above, do not
fall under Medtronic’s core product line. And hence are not getting the required investment and focus at present. Rather they can
do better under separate ownership. This can also be prolific from the point of view of the company. The divestment of these non-
core non-profitable businesses will help Medtronic to focus more on core products. This will enable the company to invest over
the long-term, high-return, internal and external opportunities that are more directly aligned with the company’s growth strategies
of therapy innovation, globalization, and economic value. According to the company, post-closing, the transaction is expected to
result in an immediate positive impact to Medtronic's comparable, constant currency revenue growth rate and adjusted
comparable, constant currency operating margin of approximately 50 basis points each.

HeartWare buyout- an upside: We are looking forward to Medtronic’s acquisition of HeartWare International, a global medical
device manufacturer dedicated to serve patients with advanced heart failure, for a deal value of $1.1 billion. Medtronic believes
the acquisition to expand its leadership across the heart failure continuum. This deal is also expected to aid Medtronic in offering
much more advanced less-invasive heart pumps. We believe this in turn will expand the company’s customer base apart from
providing better patient outcome. Medtronic projects this merger too to meet the company’s long-term metrics for acquisitions.

Zacks Equity Research: MDT www.zacks.com Page 3 of 10

 Covidien integration on track: According to Medtronic, the Covidien acquisition is fully aligned with the company’s mission of
alleviating pain, restoring health, and extending life for patients globally. As planned, the combined company is currently focusing
on the execution of its three growth strategies, therapy innovation, globalization and economic value. It currently works on its
desire to improve clinical outcomes using technology, the growing demand for expanded access to healthcare in developing
countries and the optimization of cost efficiency in healthcare systems, including the move to value-based healthcare

According to Medtronic, the Covidien integration has been delivering robust operating leverage so far based on its four priorities.
Under preserve, the first priority, operating leverage is evident from the continued revenue growth across all business groups and
geographies. Under priority ‘optimize’, Medtronic is on track to deliver $225?$250 million in cost synergies by the end of fiscal
2017 also expects to deliver minimum of $850 million in fiscal 2018. Under the third priority ‘accelerate’ which focuses on
numerous revenue synergy opportunities, the company is successfully working on leveraging the legacy Covidien's peripheral
vascular sales force to drive sales of drug-coated balloons and leveraging Covidien's Neurovascular Division to enhance
Medtronic’s Neuroscience strategy in RTG. Under the ‘transform’ priority, the consolidated company is working on delivering
higher value in healthcare, aligning its solutions to the emerging value-based payment markets and partnering with new
stakeholders to lead and succeed in the transforming healthcare marketplace. Till the end of fiscal 2017, the company We
realized over $600 million in synergy savings and has remain on track to deliver its goal of $850 million of total cost savings by
the end of fiscal 2018.

Signs of stability in Cardiac Rhythm & Heart Failure (CRHF) market: Over more than a year, we have observed a consistently
and gradually stabilizing trend in the global CRHF market. This should improve further over the coming quarters. It is encouraging
to note that in the reported quarter, Medtronic witnessed impressive results coming from Arrhythmia Management, driven by the
continued global adoption of the Reveal LINQ insertable cardiac monitor, as well as high-teens growth in AF Solutions at CER.
Heart Failure growth was driven in part by the company's acquisition of HeartWare, as discussed before. Services & Solutions
business also registered solid growth in the quarter.

Foraying in TMVR market: The transcatheter mitral valve replacement (TMVR) technology has bright prospects all over the
world. Mitral valve regurgitation, a heart valve disorder characterized by backflow of blood, affected roughly 1.7% of the entire
U.S. population in 2014. Alarmingly, most of the U.S. citizens suffering from heart valve-related disorders are afflicted by this.
According to marketing analytics firm GlobalData, the CAGR for transcatheter aortic valve replacement (TAVR) market will surge
19.7% from 2013 to more than $3 billion in 2020. Since the TMVR patient population is almost four times that of TAVR, the TMVR
market is undoubtedly more lucrative. This huge prospect forced Medtronic to venture in the TMVR market through its recently
completed $458 million acquisition of California-based medical device start-up firm – Twelve, Inc.

Focus on emerging markets to add value: Despite facing severe macroeconomic pressures, Medtronic saw the emerging
markets demonstrate double-digit growth in the last reported quarter which contributed nearly 14% to the company’s overall
revenue growth. While the growth was strong, it also remained in line with the company’s 150?200 bps expectation, despite the
dismal sales performance in the Middle East where revenue declined in low-single-digits on falling oil prices. However, it is
encouraging to note that while Medtronic expects continued pressure in the Middle East for the rest of the year, it believes the
basic demand for critical lifesaving therapies to eventually rebound strongly in this region.

In the reported quarter, businesses in China, Latin America, and Southeast Asia showed sustained strength, growing in strong,
double digit. Eastern Europe on the other hand, grew in high single digit. Within the next decade, China is expected to be the
biggest health care market in the world, outpacing the U.S. Latin America also recorded strong broad-based growth across major
markets like Brazil, Columbia, Mexico, Chile and Argentina.

Overall, Medtronic remains confident and enthusiastic about its long-term outlook for emerging markets. The company is focused
on developing new public and private partnerships as well as executing channel optimization strategies. Medtronic expects
Covidien to further strengthen its presence in emerging markets as it leverages or combines infrastructure customer relationships
and adds breadth to products and services. This should enhance the combined company’s ability to consistently contribute 150
to 200 bps to Medtronic's overall growth from emerging markets.

Prudent use of cash: Medtronic exited the fiscal 2017 with $4.97 billion in cash and cash equivalents, compared to $2.77 billion
at the end of third quarter fiscal 2017. Full-year free cash flow was $5.62 billion, as compared to $4.17 billion in the year-ago
period. Out of the year’s free cash flow, the company returned more than 50% to shareholders in the form of dividends and
repurchase during fiscal 2017. In addition, the company invested approximately $1.5 billion in several strategic investments and
five tuck-in acquisitions.

In fiscal 2017, the company repurchased $3.1 billion of ordinary shares (total payout ratio of 86%) and paid $2.4 billion in
dividends. The company earlier increased its dividend payout ratio to 400% on an adjusted basis within the next few years and
expects to execute $5 billion incremental share repurchase commitment through fiscal 2018.

Going by the long-term capital deployment policy, Medtronic expects to generate $25 billion in free cash flow over the next five
years ($17 billion generated in the past five years) and will strive to return 50% to shareholders through dividends and share

Zacks Equity Research: MDT www.zacks.com Page 4 of 10

 repurchases.

Last Earnings Report

Medtronic reported financial results for fourth-quarter fiscal 2017. Adjusted earnings per Quarter Ending 04/2017
share (EPS) in the reported quarter came in at $1.33, $0.02 ahead of the Zacks Consensus
Report Date May 25, 2017
Estimate and up 4.7% year over year.
Sales Surprise 0.77%
Adjustments in the quarter primarily included certain impact of restructuring charges, EPS Surprise 1.53%
intangible asset amortization and acquisition-related items. After adjusting unfavorable Quarterly EPS 1.33
foreign exchange impact of $0.02, adjusted EPS came in at $1.35, up 6% year over year.
Annual EPS (TTM) 4.60

Without these adjustments, the company reported net income of 84 cents per share, up
7.7% year over year.

For the full year, adjusted earnings came in at $4.60 per share, a 5.3% improvement from the year-ago period.

Total Revenue

Worldwide revenues in the reported quarter grossed $7.92 billion, up 5% on a constant exchange rate or CER basis (same as
reported). The top line remained ahead of the Zacks Consensus Estimate of $7.86 billion. Foreign currency fluctuation affected
Medtronic’s fiscal fourth quarter revenues by $37 million.

Fiscal 2017 revenues came in at $29.71 billion, up nearly 5% at CER on constant week basis. This has also sailed past the Zacks
Consensus Estimate of $29.64 billion.

In the quarter under review, U.S. sales (56% of total sales) increased 4% year over year to $4.40 billion. Non-U.S. developed market
revenues totaled $2.45 billion (31% of total sales), a 4% increase at CER (up 2% as reported). Emerging markets experienced 10%
revenue growth (up 11% as reported) to $1.06 billion at CER.

Segment Details

The company currently generates revenues from four major groups, viz. Cardiac & Vascular Group (CVG), Minimally Invasive
Therapies Group (MITG), Restorative Therapies Group (RTG) and Diabetes Group.

CVG comprises Cardiac Rhythm & Heart Failure (CRHF), Coronary & Structural Heart (CSH), and Aortic & Peripheral Vascular
divisions (APV). MITG includes both the Surgical Solutions division and the Patient Monitoring & Recovery (PMR) division. RTG
includes the Spine, Brain Therapies, Specialty Therapies and Pain Therapies segments, while the Diabetes Group incorporates the
Intensive Insulin Management (IIM), Non-Intensive Diabetes Therapies (NDT), and Diabetes Service & Solutions (DSS) divisions.

Revenues from CVG improved 5% at CER (or up 4% as reported) to $2.85 billion, driven by strong, balanced growth across all three
divisions.
CRHF sales were $1.54 billion with 4% year-over-year growth at CER (up 3% as reported). This came on the back of growth in mid-
single digit in Arrhythmia Management at CER. This apart, the HeartWare International acquisition drove growth in Heart Failure
division.

CSH revenues were up 4% at CER (same on a reported basis) to $847 million on the back of mid-thirties constant currency growth in
transcatheter aortic valves as a result of strong customer adoption of the CoreValve Evolut R platform.

APV revenues registered 6% growth at CER (up 5% as reported) to $457 million, driven by mid-single digit growth in Aortic and high-
single digit growth in Peripheral.

In MITG, worldwide sales reached $2.61 billion, marking a 6% year-over-year increase at CER on high-single digit growth in Surgical
Solutions and mid-single digit growth in PMR.

In RTG, worldwide revenues of $1.95 billion were up 5% year over year at CER (up 4% as reported) on high-single digit growth in Brain
Therapies, mid-single digit growth in Specialty Therapies and low-single digit growth in Spine, thus mitigating a decline in Pain
Therapies. Revenues from the Diabetes group went up 4% at CER (up 3% as reported) to $512 million.

Margins

Gross margin during the reported quarter expanded 45 basis points (bps) to 69.2% on 5.3% increase in gross profit to $5.48 billion.
Adjusted operating margin improved 6 bps year over year to 30.3%. This was owing to a 5% rise in selling, general and administrative
expenses (to $2.48 billion) which was offset by a 3.8% decline in research and development expenses (to $553 million). Other
expenses in the reported quarter was $48 million as compared to Other income of $21 million in the year-ago period.

Zacks Equity Research: MDT www.zacks.com Page 5 of 10

 Guidance

Medtronic has also provided its initial fiscal 2018 revenues and EPS guidance. The company expects full-year revenues to grow in the
range of 4-5% at CER. Foreign currency fluctuation this time is expected to have a positive $75-$175 million impact for the fiscal year.
However for the first quarter of fiscal 2018, currency translation will adversely impact to the tune of $10-$60 million on revenues. The
Zacks Consensus Estimate for revenues remains at $30.72 billion for fiscal 2018.

Fiscal 2018 adjusted earnings per share is expected to grow in the range of 9-10% at CER. Currency translation will negatively impact
the full-year earnings number by approximately $0.05-$0.10, including the $0.03-$0.05 impact in the first quarter. The Zacks Consensus
Estimate is pegged at $4.93 per share.

Recent News
On Jun 26, 2017, Medtronic announced a new outcomes-based agreement with Aetna for type 1 and type 2 diabetes patients currently
on multiple daily insulin injections for their diabetes management.

On Jun 13, 2017, Medtronic Canada, a subsidiary of Medtronic announced the grand opening of its first Canadian Medtronic Resource
Centre in support of patients living with diabetes in Surrey BC, and the surrounding area.

On Jun 7, 2017, Medtronic announced the U.S. launch of the MiniMed 670G system - the world`s first Hybrid Closed Loop system for
people with type 1 diabetes. Featuring the company`s most advanced SmartGuard HCL technology and Guardian Sensor 3, it is the
only insulin pump approved by the Food and Drug Administration (FDA) that enables personalized and automated delivery of basal
insulin, the background insulin needed to maintain stable blood sugar levels throughout the day and night.

On Jun 6, 2017, Medtronic announced it has received a Health Canada licence for SureTune 3 software for deep brain stimulation
(DBS). The latest innovations in the SureTune technology allow for more precise, efficient treatment while also improving patient
management with centralized data storage for easy reference.

On May 24, 2017, Medtronic announced first patient enrollment in the IN.PACT AV Access Drug-Coated Balloon (DCB) study for use in
patients with end-stage renal disease (ESRD). The U.S. Food and Drug Administration (FDA) approved the investigational device
exemption (IDE) study to evaluate the safety and efficacy of IN.PACT(TM) AV Access DCB as a treatment for failing arteriovenous (AV)
fistulas in ESRD patients.

On May 18, 2017, Medtronic announced that its Resolute Onyx Drug-Eluting Stent (DES) met its primary endpoint of Target Lesion
Failure (TLF) at one year for the treatment of coronary artery disease in extra-small vessels.

On May 10, 2017, Medtronic announced that the U.S. Food and Drug Administration (FDA) approved its portfolio of quadripolar cardiac
resynchronization therapy-pacemakers (CRT-Ps) that improve therapy delivery for patients with heart failure.

On May 01 2017, Medtronic announced the U.S. Food and Drug Administration (FDA) approval and the U.S. launch of its Resolute
Onyx Drug-Eluting Stent (DES).

Zacks Equity Research: MDT www.zacks.com Page 6 of 10

 Industry Analysis Zacks Industry Rank: 117 / 265 (Top 44%) Top Peers

Capricor Therapeutics, Inc. (CAPR)

Bovie Medical Corporation (BVX)
Cerus Corporation (CERS)
Agios Pharmaceuticals, Inc. (AGIO)
AtriCure, Inc. (ATRC)
Bio-Rad Laboratories, Inc. (BIO)
Alere Inc. (ALR)
Boston Scientific Corporation (BSX)

Industry Comparison Medical - Products | Position in Industry: 54 of 62 Industry Peers

MDT X Industry S&P 500 ABT SYK BAX

VGM Score - -
Market Cap 113.51 B 139.14 M 20.84 B 85.29 B 55.31 B 33.01 B
# of Analysts 19 4 13.5 18 22 15
Dividend Yield 2.03% 0.00% 1.82% 2.23% 1.47% 2.27%

Value Score - -
Cash/Price 17.25 2.78 10.40 27.96 23.42 36.92
EV/EBITDA 15.22 -0.79 12.87 29.80 23.57 5.66
PEG Ratio 2.31 2.19 2.00 1.85 2.28 2.10
Price/Book (P/B) 2.28 3.61 3.26 2.69 5.48 3.78
Price/Cash Flow (P/CF) 17.05 -0.01 13.51 29.74 28.85 30.90
P/E (F1) 16.91 17.14 18.98 19.84 22.76 25.41
Price/Sales (P/S) 3.64 3.87 2.51 3.23 4.50 3.15
Earnings Yield 5.88% 1.16% 5.22% 5.04% 4.41% 3.95%
Debt/Equity 0.51 0.00 0.68 0.75 0.66 0.32
Cash Flow ($/share) 6.81 -0.00 5.41 2.79 7.33 3.45

Growth Score - -
Hist. EPS Growth (3-5 yrs) 7.88% 11.63% 7.16% 12.54% 12.37% 26.47%
Proj. EPS Growth (F1/F0) 7.37% 7.56% 9.49% 12.63% 11.97% 21.94%
Curr. Cash Flow Growth 2.71% 1.25% 5.44% 1.46% 16.79% 24.04%
Hist. Cash Flow Growth (3-5 yrs) 15.26% 5.96% 6.71% -14.29% 11.25% -9.78%
Current Ratio 1.75 2.86 1.36 2.91 2.39 2.72
Debt/Capital 33.96% 12.45% 41.73% 42.96% 39.65% 24.30%
Net Margin 13.56% -3.72% 9.78% 4.96% 14.22% 8.85%
Return on Equity 12.49% 5.18% 15.90% 18.28% 21.62% 12.88%
Sales/Assets 0.30 0.63 0.54 0.33 0.56 0.66
Proj. Sales Growth (F1/F0) 4.87% 3.16% 5.15% 26.71% 8.32% 3.16%

Momentum Score - -
Daily Price Chg -0.54% 0.00% 0.31% -0.06% 0.52% 0.38%
1 Week Price Chg -0.56% -0.56% -0.00% -1.06% 3.48% 0.02%
4 Week Price Chg -5.96% 0.00% 1.18% 0.90% 6.98% 0.78%
12 Week Price Chg 0.22% 0.42% 3.60% 10.03% 9.64% 8.14%
52 Week Price Chg -4.70% 0.00% 12.44% 9.05% 27.81% 25.23%
20 Day Average Volume 3,886,852 68,922 0 5,600,217 1,076,892 2,319,126
(F1) EPS Est 1 week change -0.03% 0.00% 0.02% 0.00% 1.21% 5.37%
(F1) EPS Est 4 week change -0.05% 0.00% 0.33% 0.61% 1.23% 5.20%
(F1) EPS Est 12 week change -0.02% 0.00% 1.00% 0.72% 1.22% 5.24%
(Q1) EPS Est Mthly Chg -0.38% 0.00% 0.00% -1.21% 1.37% 8.52%

Zacks Equity Research: MDT www.zacks.com Page 7 of 10

Zacks Equity Research: MDT www.zacks.com Page 8 of 10
 Zacks Rank Education
The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise.

Agreement
This is the extent which brokerage analysts are revising their earnings estimates in the same
direction. The greater the percentage of estimates being revised higher, the better the score for this
component.

For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up,
and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the
downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the
percentage of agreement the better.

Magnitude
This is a measure based on the size of the recent change in the current consensus estimates. The
Zacks Rank looks at the magnitude of these changes over the last 60 days.

In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago,
7-days ago, and the most current estimate The difference between the current estimate and the
estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will
score better on this component.

Upside
This is the difference between the most accurate estimate, as calculated by Zacks, and the
consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most
accurate estimate of $1.05 will have an upside factor of 5%.

This is not an indication of how much a stock will go up or down. Instead, it's a measure of the
difference between these two estimates. This is particularly useful near earnings season as a
positive upside percentage can be used to help predict a future surprise.

Surprise
The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have
positively surprised in the recent past have a tendency of positively surprising again in the future (or
missing if they recently missed).

A stock with a recent track record of positive surprises will score better on this factor than a stock
with a history of negative surprises. These stocks will have a greater likelihood of positively
surprising again.

Zacks Style Score Education

The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to
focus on the best Zacks Rank stocks that best fit their own stock picking preferences. Value Score

Academic research has proven that stocks with the best Growth, Value, and Momentum Growth Score
characteristics outperform the market. The Zacks Style Scores rate stocks on each of these
individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than Momentum Score
a C; and so on.
VGM Score
As an investor, you want to buy stocks with the highest probability of success. That means buying
stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B.

Zacks Equity Research: MDT www.zacks.com Page 9 of 10

 Disclosures
The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks
Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the
analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or
will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional
information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we
believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the
report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed
herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities
herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy
or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a
proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness
of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank
2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each
company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total.
Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better.
Historically, the top half of the industries has outperformed the general market.

Zacks Equity Research: MDT www.zacks.com Page 10 of 10