Investment Club expands health care holdings through investment in Medtronic
Jack Viscuso | Thursday, March 3, 2022
Ahead of spring recess, the Notre Dame Investment Club board and its members gathered in Jordan Auditorium on Tuesday night to hear a pitch for medical device company Medtronic.
Presented by sophomores Griffin Casella, Michael Gennaro, Ava Sciubba and Callen Smith, the team’s pitch centered on their confidence in the company’s product offerings and strategies amid a macroeconomic environment that presents favorable growth opportunities.
An investment in the medical device company would signal a major shift for the club, increasing the Investment Club’s exposure to the health care sector. As it stands, the club portfolio’s only health care investment is PetIQ, a health and wellness company for pets.
Since its founding in 1949, Medtronic, a Minneapolis-based company, has grown into a formidable player in the medical device industry.
“Medtronic is a medical device manufacturer that operates with 90,000 employees across 150 countries,” Gennaro said. “They have product offerings in four different categories: cardiovascular, neuroscience, medical surgical and diabetes.”
The company is credited for the creation of the first battery-operated pacemaker and continues to introduce revolutionary products. This breadth of offerings has fueled an intellectual property advantage of nearly 49,000 patents.
“Within the last year, Medtronic has had over 200 products approved for a variety of medical applications,” Casella said. “This is much higher than other competitors.”
Some of the key products highlighted in the pitch included the CoreValve Evolut FX, Hugo robotic-assisted surgery platform, Vanta PC Neurostimulator and the InPen Smart Insulin Pen.
A broader product portfolio provides the impetus for Medtronic to sell its products in other emerging markets in Europe, the Middle East and Asia.
“Medtronic has a 6.5% global market share,” Sciubba said. “They compete against other players in the industry, including Boston Scientific, Abbott Laboratories and Zimmer Biomet.”
Nonetheless, improved technological developments, an aging U.S. population and growing demand from overseas markets have sparked a flurry of acquisitions by Medtronic to broaden their product line.
“Since Medtronic’s new CEO Geoff Martha took over in April 2020, Martha has indicated a more aggressive acquisition strategy of smaller health care companies that usually just specialize in one product,” Gennaro said.
These developments are expected to fortify Medtronic’s market position against competitors and equip sales representatives to pursue new customer relationships with physicians, hospitals and distributors.
Underpinned by confidence in the favorable growth prospects, the team’s analysis yielded a potential 18.1% upside from a Monday closing stock price of $104.99 to $124.05.
Following the pitch, the team fielded a plethora of questions concerning doubts about Medtronic’s competitive advantage and acquisition plans.
While club president Colin Gutzmer’s survey of the audience’s attitude toward Medtronic at the end of the pitch did not garner widespread enthusiasm, board members ultimately voted to buy Medtronic. Additionally, the board agreed to unload shares of Micron Technology, a semiconductor company that has lately underperformed the market.