Medtronic's (MDT) Guardian Connect CGM System Wins FDA Nod

Medtronic plc (NYSE:MDT) announced the receipt of FDA approval for the Guardian Connect continuous glucose monitoring (CGM) system for diabetes patients between the ages of 14 to 75 years.

Notably, the system will be available in the first quarter of Medtronic’s fiscal year 2019 (May-July 2018).

Guardian Connect CGM

The Guardian Connect is the first and only standalone CGM system to help diabetes patients be aware of potential high or low glucose events up to 60 minutes in advance.Notably, the Guardian Connect will enable patients to use multiple daily injections (MDI) and manage the disease proactively. Patients and their relatives will stay informed, track glucose in real-time and even receive text alerts through the system.

The system’s users will have exclusive access to the Sugar.IQ smart diabetes assistant. This helps them deal with regular complications related to diabetes. The Sugar.IQ assistant consistently studies the response of an individual’s glucose levels to their food intake, insulin dosages, daily routines and other factors.

The Sugar.IQ assistant, combined with the Guardian Connect can transform difficult-to-determine patterns into personalized as well as actionable insights. This will enable patients to keep glucose levels within the target range.

Per the press release, latest sensors along withintelligent algorithms allow users to predict and understand glucose excursions, particularly hypoglycemia. This is likely to make diabetes more comprehensible for people who inject insulin. Using the CGM will help diabetes patients to achieve more glycemic time-in-range and reduce the risk of hypoglycemia.

Diabetes Business in Focus

Medtronicis consistently trying to enhance the Diabetes business. Medtronic witnessed a 13% rise at constant exchange rate in the Diabetes business’ revenues during third-quarter fiscal 2018. The company benefited from a positive uptake of new sensor-augmented insulin pump systems in the United States and the international markets along with enhanced production capacity for the same.

Recently, the company announced that FDA has approved a new arm indication for the Guardian Sensor 3 continuous glucose monitor (CGM), which is used with the MiniMed 670G insulin pump.

Notably, Medtronic expects double-digit growth in the segment in fourth-quarter fiscal 2018, courtesy of a consistent performance of MiniMed 670G system in the United States along with enhanced sensor supply capacity.

Additionally, Medtronic has been gearing up for the international introduction of the MiniMed 670G and the U.S. launch of new professional CGM iPro 3 in 2019.

Market Potential

An ageing population, unhealthy lifestyle, a rising awareness and higher expenditure in healthcare are likely to drive growth in the highly competitive diabetes market.

Per a report by Mordor Intelligence, the global market for diabetes care devices is projected to reach a value of $30.25 billion by 2021, at a CAGR of 5.93%. Considering the bullish market sentiments, we believe that the latest development has arrived at an opportune moment.

Stock Performance & Estimate Revision

Over the past month, shares of Medtronic have underperformed the industry. The stock has returned 0.6% compared with the industry’s 3.9% rally and the S&P 500 index’s 1.9% gain.

Also, the estimate revision trend for the current year is unfavorable with 10 estimates moving south over the last two months compared with two in the opposite direction. Earnings estimates fell around 0.4% to $4.75 per share.

Zacks Rank & Key Picks

Medtronic carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical sector are Bio-Rad Laboratories (NYSE:BIO) , athenahealth, Inc. (NASDAQ:ATHN) and PerkinElmer (NYSE:PKI) .

Bio-Rad Laboratories sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The company has a long-term expected earnings growth rate of 20%.

athenahealth is a Zacks #1 Ranked player. The company has a long-term expected earnings growth rate of 21.5%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

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