Medtronic Inc.: Incredible 77.69% Gain in One Day with MDT Calls

Medtronic, Inc. (NYSE:MDT) with its market capitalization of $71.39B is a medical technology company. The company provides products and therapies for use by medical professionals to meet the healthcare needs of their patients. Its primary products include those for cardiac rhythm disorders, cardiovascular disease, neurological disorders, spinal conditions and musculoskeletal trauma, urological and digestive disorders, and ear, nose, and throat and diabetes conditions.

3 Months Later: Update on MDT Calls

My last coverage of Medtronic was done in November 2014, in a post titled, “The Stock Behind 66.12% Profit in One Month”. In that post, I talked about how the stock’s options have gained an incredible 66.21% in one month. I then went ahead to discuss the company’s second quarter earnings and possibilities for more profitability down the road. I concluded that piece by recommending the MDT Feb 2015 75.000 call (MDT150220C00075000) at an asking price of $1.43.

When I wrote last piece three months ago, shares of Medtronic were trading around $72.54 per share and the options contract had an asking price of $1.43. However, as at 10:52AM EST today, shares of Medtronic were trading up 3.30% around $77.67 after it has established a new 52-week high of $77.77. The options contract was also sporting a 77.69% gain from an open of $1.63 to an asking price of $2.15.

Why Are The Shares of Medtronic Soaring?

The major reason behind the gains being recorded in the shares of Medtronic today is the impressive third quarter (Q3 2015) results that the company posted earlier in the day. Medtronic reported third quarter earnings of $1.01 to beat the consensus estimate of $0.97 per share. The company reported revenue of $4.32 billion to beat the consensus estimate of $4.24 billion.

Other important aspects of the third quarter reports include the following:

U.S. revenue of $2.459 billion increased 8 percent

 International revenue of $1.859 billion increased 7% on a constant currency basis or declined 2% as reported

International sales accounted for 43% of Medtronic’s worldwide revenue in the quarter

Emerging market revenue of $542 million increased 12% on a constant currency basis or 6 percent as reported and represents 13% of company revenue

Going forward, Medtronic expects constant currency revenue growth in the range of 4 to 6 percent on a combined pro forma basis in the fourth quarter

Where is Medtronic Heading?

MDT Chart

The chart above shows how the shares of Medtronic have traded within the last one year. You will observe that the stock has been predominantly northbound as shown by the red line of the rising trend line resistance.

You’ll also observe that the stock has been channeling in the last three months as seen in the shadowed (green) area. The stock has risen above the channel once in the last three months and today’s surge marks the second time that the stock will rise above the channel; hence, we can reasonably opine that a breakout is imminent.

How to Trade MDT Options

From the foregoing, it is obvious that I am a Medtronic bull. I am optimistic about the prospects of Medtronic in the current quarter and I recommend buying MDT call options. You should consider buying the MDT May 2015 80.000 call (MDT150515C00080000) at an asking price of $1.73.

— Daily Option Alerts

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