Medtronic Hits FDA Snag For Diabetes Business — Leading A Rival To Pop

Medtronic (MDT) received a warning from the Food and Drug Administration regarding its diabetes business on Wednesday, leading MDT stock to tumble.


The warning stems from a July inspection of Medtronic’s facility in Northridge, Calif. In the letter, the FDA cited concerns with the method Medtronic used to assess damage to a component in its MiniMed 670g insulin pump system. Officials also were concerned with Medtronic’s process for handling device complaints and timeliness in responding to recalls.

“We are committed to fully resolving all observations as effectively and quickly as possible,” Sean Salmon, president of Medtronic’s diabetes business, said in a written statement. “Nothing is more important to us than providing the highest quality products to people living with diabetes.”

In response, MDT stock toppled 6% to 104.94 on today’s stock market. Tandem Diabetes (TNDM) stock, on the other hand, surged 10.5% to 144.34. Insulet (PODD) stock jumped 5.4% to 269. Tandem and Insulet make rival insulin pumps.

MDT Stock: 2021 Guidance Maintained

Medtronic maintained its organic sales growth and adjusted profit guidance for the fiscal third quarter and fiscal year 2022.

But the company now expects its diabetes unit to decline by a mid single-digit percentage, Evercore ISI analyst Vijay Kumar said in a note. That implies a high single-digit to double-digit decline in the fourth quarter. For fiscal year 2023, Medtronic called for an impact of 0.5%-1% on total growth.

It’s also possible the FDA might not approve Medtronic’s next pump, dubbed MiniMed 780g, Kumar said. That would have a roughly $325 million impact on sales.

“The FDA has the right to not approve new products until the warning letter has been lifted,” he said.

Medtronic has 15 days to respond to the warning letter.

Kumar kept his outperform rating and 140 price target on MDT stock.

MDT stock has trended down since early September. Shares dropped below their 50-day line late that month and crossed below their 200-day moving average in mid-October, according to

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


Adagio Therapeutics Crashes As Omicron Delivers A Blow To Its Covid Antibody

Eli Lilly Pops On Boosted 2021 Outlook As Covid Brings In $2.1 Billion

Get Stock Ideas From IBD Experts Each Morning Before The Open

Learn How To Time The Market With IBD’s ETF Market Strategy

Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks

Source link