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Citi analyst cuts Medtronic first quarter forecast

If a Wall Street analyst’s revenue forecast turns out to be correct, Medtronic shareholders will have little to cheer about Aug. 23 when the medical device company announces its first fiscal quarter results.

Citi analyst Matthew Dodds published a note Monday that said he expects Medtronic will now garner $3.95 billion in revenue in the quarter ended July 31, a full $95 million less than what he previously calculated.

Dodds attributed the change to his impression that “the ICD and spinal implant markets showed an accelerating organic decline last quarter.”

As a result, he forecast Medtronic’s revenue from ICD sales in the U.S. would be $385 million, taking into account a U.S. ICD market decline of 9 percent. Medtronic’s spine division, which has been affected by the controversy surrounding the Infuse product, was not immune from Dodds’s chopping block. Dodds now expects spine division revenue to be $831 million, $30 million lower than his previous expectation.

Dodds also reduced his earnings-per-share expectation by a penny to 78 cents, while the 12-month price target was lowered to $40 given the overall 15 percent stock market decline in the healthcare stocks. The lowered target price was not hurt by the difficulties facing Medtronic. Rather, it was driven by the market crashing last week.

Perhaps most distressing for investors and shareholders is Dodds’s belief that Medtronic won’t likely be able to catch up with the rest of the industry’s sales and earnings-per-share growth until the fourth fiscal quarter, which ends April 29, 2012.

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