Medtronic Teams Up With Fitbit, Accelerates Diabetic Care

As people are becoming increasingly conscious about the various health hazards linked to diabetes, Medtronic (NYSE:MDT) is efficiently strategizing to capture the diabetes treatment market, which is expected to grow at a CAGR of 6.3% during the 2015–2020 period (according to a Markets and Markets report).

As a major breakthrough, the company recently joined forces with Fitbit (NYSE:FIT) , a popular name in the field of connected health and fitness category to create an integrated diabetes care management program. Per the agreement, Fitbit’s iPro2 myLog mobile app will enable type 2 diabetes patients to check their glucose levels and physical activity data in one streamlined application. The application will also simplify the sharing of information with the patient`s healthcare team, enabling them to come up with a more efficient diabetes management option.

Price Movement

Medtronic has been going through a rough phase since its earnings release in November. While its share price has consistently remained above the broader Zacks categorized Medical product industry over the last six months, the mixed second-quarter performance disrupted the trend. Per the latest movement, the stock is down 8.7%, wider than the loss of 3% for the broader industry over this period. The lowered fiscal-2017 guidance is more disappointing, indicating slim chances of recovery down the line.

Additionally, Medtronic has seen 18 downward revisions with no upward movement for the full year over the last one month. Similarly, for the same period, current-year estimates have slid 8 cents from $4.65 to $4.58. However, we believe that the company’s latest initiatives to expand its portfolio in sectors with huge untapped potential are expected to boost stock price.

Coming back to the company’s teaming up with Fitbit, the iPro2 myLog App will collect data generated by the Fitbit activity tracker and Medtronic’s iPro2 professional Continuous Glucose Monitors (CGM) system. This, thereby, will enable the patients to monitor how exercise is impacting their glucose levels.

Why Medtronic is Focusing on Diabetes Market?

Of late, Medtronic has been concentrating on the diabetic device market which is expanding in leaps and bounds. The disease is on the rise and is no longer the tag of the rich nations only. Per a latest World Health Organization data, the global prevalence (age-standardized) of diabetes has nearly doubled since 1980, rising from 4.7% to 8.5% in the adult population.

According to a Markets and Markets report, the global diabetes care device market has been forecasted to reach $2.3 billion by 2020 and is estimated to grow at a CAGR of 6.3% during the period.

Medtronic has made many developments in recent times within its Diabetes group. This includes the U.S. FDA approval of the MiniMed 630G System and the earlier-than-expected FDA approval for the MiniMed 670G System, which is expected to become commercially available in 2017. Also, it got FDA approval for Enlite sensor, to be used with the iPro2 Professional CGM system. These product launches, along with the company’s recent partnerships with big mammoths like Fitbit in diabetes space is expected to accelerate growth further for the company in the coming period.

Zacks Rank and Key Picks

Medtronic currently holds a Zacks Rank #4 (Sell). A couple of better-ranked medical stocks include NxStage Medical Inc. (NASDAQ:NXTM) and Baxter International Inc. (NYSE:BAX) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NxStage Medical surged 29.9% over the last one year compared with the S&P 500’s 9.5% growth over the same period. The company has a four-quarter average positive earnings surprise of 46.3%.

Baxter International rallied 23.9% over the past year, much higher than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 27%.

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