Ahead of the Bell: Medtronic views remain positive

On Tuesday, the company said second-quarter profit fell because of legal expenses and declining foreign exchange rates. Excluding the legal fees, the Minneapolis-based company's performance still fell shy of Wall Street forecasts on lower-than-expected sales of pacemakers, spinal implants and other devices.

But, analysts mainly reaffirmed positive ratings on the stock following the report Tuesday, saying future risks seem limited.

"If business proves stable over the coming quarters, we would expect a correction to bring valuation in line with the company's peers," said Thomas Weisel Partners analyst Philip Legendy, in a note to investors, reaffirming an "Overweight" rating.

Still, he cut his price target to $43 from $61 after the company reduced fiscal 2009 guidance.

Medtronic expects revenue between $14.6 billion and $15 billion, down from $15 billion to $15.5 billion and earnings per share between $2.90 and $2.98 instead of between $2.94 and $3.02.

Citi Investment Research analyst Mathhew J. Dodds reaffirmed a "Buy" rating on the stock, calling the guidance conservative, but overall unchanged.

"While this received all the attention today, the fact that second-half of 2009 earnings per share guidance was essentially unchanged should not be overlooked," he said, in a note to investors Tuesday.

He said investors are overlooking the company's cost-cutting capability.

Meanwhile, Deutsche Bank-North America analyst Tao Levy reaffirmed a "Buy" rating while BMO Capital Markets analyst Joanne Wuensch reaffirmed a "Market Perform" rating.