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Medtronic’s Diabetes Division Spin-Off: Hold Rating Amid Modest Immediate Value Potential

Medtronic’s Diabetes Division Spin-Off: Hold Rating Amid Modest Immediate Value Potential

Needham analyst Michael Matson has maintained their neutral stance on MDT stock, giving a Hold rating on May 30.

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Michael Matson has given his Hold rating due to a combination of factors related to Medtronic’s strategic decisions and financial outlook. The company’s plan to spin off its Diabetes division, which accounts for about 8% of its total revenue, into a separate public entity is seen as a sensible move. However, Matson believes that this separation is unlikely to immediately unlock significant value for shareholders.
In his analysis, Matson conducted a sum-of-parts valuation, assessing Medtronic without its Diabetes segment and the Diabetes business as independent entities. His Base Case scenario suggests that the combined value of these two entities is approximately $93 per current Medtronic share, which is only slightly above the current market price. This modest potential for immediate value increase supports his Hold rating, as the long-term benefits of the separation may take time to materialize.

In another report released on May 30, DBS also maintained a Hold rating on the stock with a $90.00 price target.

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