Unusual Options Activity In Medtronic

Medtronic plc develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide.

Medical devices range all the way from bedpans to test kits to  laser surgical devices. In the case of Medtronic, they make pacemakers, stents, insulin pumps, glucose monitoring systems etc. and their Restorative Therapies Group offers products for spinal surgeons, neurosurgeons, orthopedic surgeons, colorectal surgeons etc.

Medtronic reported first-quarter earnings yesterday of $1.26 per share, which beat estimates of $1.18 per share.  The company reported quarterly sales of $7.5 billion, which also beat estimates of $7.4 billion.  But I think the reason the stock pop was the company raised their fiscal year 2020 EPS guidance from $5.44-$5.50 to $5.54-$5.60.   That might not sound like a lot, but based on share outstanding, that an extra $134 million to the top line.

The stock has now run up 8.1% amid a 4-session win streak, which would be the best 4-day stretch since it ran up 10.2% in the four days ending Oct. 2, 2015

Evercore ISI analyst Vijay Kumar called the fiscal first quarter critical for Medtronic. Historically, Medtronic stock runs up heading into earnings, then gives it all back due to one-off items, he said in a note to clients. He classified the report a “big boy print.”

“We think Medtronic managed to assuage all these fears with an organic revenue beat that came in well ahead of expectations and crushed margins,” he said. “The one concern into the print was diabetes, and Medtronic managed to blow past expectations.”


Not only is the stock  up 8% in the last 4 trading days, bu the Smart Money thinks the stock has more room to run.

So it was no surprise to see the Smart Money buying bullish call options. They bought over 20,000 October call options with a strike price at $115,

which represents a 7% increase from current price. Will the Smart Money be right, stay tuned.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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