Medtronic shares rise following Goldman upgrade

Medtronic shares rose $1.47, or 3 percent, to $50.43.

On Tuesday, the Minneapolis-based company reported earnings -excluding restructuring and buyout charges -of 78 cents per share, widely beating analysts' average forecast of 72 cents per share, according to Thomson Financial.

Goldman Sachs analyst Lawrence Keusch said that the company's strong market share, distribution capabilities, and management team bode well for the company's future. He increased his six-month price target to $57 from $52, suggesting the stock will rise 16 percent over the period.

The analyst added that his recommendation is based on Medtronic's ability to improve its research and development capability and its current appealing share price.

Keusch also increased his fiscal year 2009 profit estimates to $3.05 from $2.95 per share. On Tuesday, Medtronic issued 2009 profit guidance of $2.94 to $3.02 per share. Analysts expect, on average, fiscal 2009 profit of $2.96 per share.

"We believe that with a combination of operational efficiencies and lower R&D spending it is likely that the company can exceed earnings guidance, particularly in the back half of the year," Keusch wrote.

JPMorgan analyst Michael Weinstein, who rates Medtronic shares "Overweight," also raised his 2009 profit estimate to $2.98 per share from $2.93.

"The fourth quarter was a good first step to management re-establishing credibility and turning Street attention to the operating leverage and capital allocation story that (Chief Executive Officer) Bill Hawkins and team have clearly bought into," he wrote.

Citi Investment Research analyst Matthew J. Dodds said that Medtronic's fiscal 2009 guidance appears conservative. Dodds has a "Buy" rating on shares and upped his price target by $1 to $60. Additionally, he increased his fiscal 2009 profit estimate by 3 cents to $2.98.