By Khushi Mandowara and Christy Santhosh
(Reuters) -Medtronic raised its annual earnings forecast on Tuesday as strong sales in its surgical and diabetes units allayed concerns about the impact of new diabetes and weight-loss drugs on long-term growth, sending its shares up nearly 4% in morning trade.
Makers of medical products used in bariatric surgery and glucose-monitoring devices have been trying to ease investor concerns over a potential hit to demand from the rising popularity of new GLP-1 drugs like Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro.
Medtronic’s CEO Geoffrey Martha said while GLP-1 drugs will have a modest impact on the bariatric surgery market, it would be temporary.
The company, which makes tools used in heart and gastrointestinal surgeries, joins peers Johnson and Johnson and Abbott Laboratories in playing down the impact of GLP-1 drugs, which suppress hunger in patients.
“Bariatric surgery will continue to remain the gold standard for addressing obesity,” Martha said, adding that many patients who try these drugs will not stay on them for more than a year due to concerns related to costs and side effects.
Sales at Medtronic’s heart devices unit, its biggest revenue driver, totaled $2.92 billion, in line with estimates.
The company’s medical surgical unit generated sales of $2.14 billion, compared with analysts’ estimate of $2.12 billion. For its diabetes unit, sales stood at $610 million, beating an estimate of $588.4 million.
The company said it also does not see any meaningful change in its diabetes growth outlook from GLP-1s through 2030.
It now expects per share profit between $5.13 and $5.19 for the fiscal year ending in April 2024, above the $5.08 to $5.16 per share range expected previously.
Dublin-based Medtronic reported an adjusted profit of $1.25 per share for the quarter ended Oct. 27, beating analysts’ estimate of $1.18 per share, according to LSEG data.
(Reporting by Khushi Mandowara and Christy Santhosh in Bengaluru; Editing by Pooja Desai)