Last Update 08 Dec 25

Fair value Increased 1.12%

MDT: Future Performance Will Reflect Cardiovascular Momentum And Emerging Product Execution Risks

Analysts have nudged our Medtronic fair value estimate higher to $111.05 from $109.82, reflecting a wave of price target increases following better than expected Q2 sales and EPS, confidence in mid single digit plus organic growth, and strengthening new product and cardiovascular momentum.

Analyst Commentary

Street research following the Q2 print has turned more constructive on Medtronic, with a cluster of price target increases and at least one notable rating upgrade framing the debate around the durability of mid single digit plus organic growth and improving execution.

Bullish analysts are increasingly willing to underwrite a modest premium valuation multiple, citing better commercial momentum, a more visible growth algorithm, and rising confidence in pipeline contributions, particularly in cardiovascular and other high growth franchises.

At the same time, a cohort of more cautious voices continues to emphasize execution risk, the need to sustain above 5% organic growth, and potential volatility around quarterly results as the market tests the durability of this emerging uptrend.

Bullish Takeaways

Multiple bullish analysts raised price targets into the mid to high $110s, arguing that consistent mid single digit plus organic growth and improving operational execution justify Medtronic trading at a slight premium to large cap medtech peers.
Q2 organic growth of roughly 5.5% and a raised full year revenue outlook, which implies about 6% growth in the back half, are seen as evidence that the growth acceleration thesis is playing out ahead of an expected further step up next fiscal year.
Several reports highlight cardiovascular outperformance and broader new product and pipeline momentum, including surgical robotics and other generational growth drivers, as key supports for a more durable, multi year growth runway.
Upgrades in rating and higher targets are being tied to stronger P and L trends, with faster growth in R and D and SG and A viewed as an investment phase that can sustain innovation, commercial scale up, and ultimately higher earnings power.

Bearish Takeaways

More cautious analysts, while lifting targets, remain at Hold equivalent ratings, indicating that a portion of the recent operational improvement is already reflected in the share price and that upside is more execution dependent from here.
There is concern that sector wide sentiment and positioning in medtech could amplify stock volatility around any miss versus elevated growth expectations, especially as investors focus closely on quarterly proof points for sustained 6 percent type growth.
Some commentary underscores that the premium multiple case is contingent on Medtronic delivering consistent mid single digit plus organic growth and continued margin discipline, leaving limited room for missteps on product launches, supply chain, or cost control.
Despite upbeat views on the CAS and diabetes opportunity set, the broader market remains attentive to external signals from suppliers and reimbursement policy, reinforcing that certain growth vectors, while attractive, still carry timing and adoption risk.

What's in the News

The FDA has cleared the Hugo robotic assisted surgery system for urologic procedures in the U.S., expanding Medtronic's presence in soft tissue robotic surgery and addressing hospital capacity and access constraints (Key Developments).
Medtronic has launched the MiniMed 780G system integrated with Abbott's Instinct sensor across the U.S., automating insulin adjustments with longer wear time and expanding the company's diabetes sensor ecosystem (Key Developments).
The company has raised its fiscal 2026 revenue growth guidance to approximately 5.5% and tightened its EPS range to $5.62 to $5.66, while outlining expectations for high single-digit EPS growth in fiscal 2027 based on accelerating revenue and operating leverage (Key Developments).
The FDA has approved the Altaviva implantable tibial neuromodulation device for urge urinary incontinence, giving Medtronic a full neuromodulation portfolio for bladder control with a long-life, low-maintenance implant (Key Developments).
Medtronic has completed a $308.7 million share repurchase tranche and has now bought back 11.61% of shares, totaling $14.3 billion under its long-running buyback program initiated in 2017 (Key Developments).

Valuation Changes

The Fair Value Estimate has risen slightly to $111.05 from $109.82, reflecting modestly higher long term earnings power.
The Discount Rate has edged down marginally to 8.77% from 8.77%, implying a slightly lower required return on Medtronic's cash flows.
Revenue Growth has ticked down very slightly to approximately 5.79% from 5.79%, indicating a largely unchanged top line growth outlook.
The Net Profit Margin has increased slightly to about 15.71% from 15.61%, signaling a small improvement in expected long term profitability.
The Future P/E has moved up modestly to roughly 28.3x from 28.2x, suggesting a marginally higher valuation multiple embedded in the forecast.

Strong demand driven by chronic disease prevalence and innovation in digital health, robotics, and AI-enabled devices positions Medtronic for accelerated top-line growth and market share gains.
Operational restructuring, emerging market expansion, and a robust product pipeline are expected to enhance profitability and support sustained long-term earnings growth.
Sustained margin pressure, underperforming segments, execution risks in new product launches, and complexities with the Diabetes spin-off could constrain Medtronic's growth and profitability.

Catalysts

About Medtronic

Develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients in the United States, Ireland, and internationally.What are the underlying business or industry changes driving this perspective?

The rapid global growth in chronic diseases (e.g., cardiovascular disease, diabetes) is driving sustained demand for Medtronic's advanced device offerings, as evidenced by strong momentum in Cardiac Ablation Solutions (CAS), innovative diabetes systems (Simplera Sync, Instinct), and new launches in hypertension management (Symplicity). This structural demand should accelerate revenue growth across core franchises.
Medtronic's investments and breakthroughs in digital health technologies, robotics (Hugo), next-generation sensors, and AI-enabled ecosystems (e.g., spine AiBLE, advanced neuromodulation) align with industry-wide digital transformation and minimally invasive trends. These platforms are set to expand procedure volumes and capture market share, supporting future top-line growth and higher-margin revenue streams.
Expansion in emerging and international markets, especially in cardiovascular and diabetes, continues to be robust-with double-digit international growth in several segments-tapping into large underpenetrated populations and providing a durable runway for organic revenue gains.
Operational transformation through ongoing separation of the Diabetes business, restructuring, and efficiency initiatives is expected to enhance margin mix (projected 50bps gross and 100bps operating margin improvement) and accelerate EPS growth as cost savings and focus on higher-margin businesses are realized.
Strengthening the innovation pipeline (e.g., Sphere-360, new carotid and thrombectomy devices, next-gen Ardian) combined with an enhanced governance/capital allocation structure and intensified R&D investment is positioned to drive higher long-term earnings growth through both new product launches and share gains in multi-billion-dollar addressable markets.

Medtronic Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Medtronic's revenue will grow by 5.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 13.6% today to 15.6% in 3 years time.
Analysts expect earnings to reach $6.3 billion (and earnings per share of $5.01) by about September 2028, up from $4.7 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $7.1 billion in earnings, and the most bearish expecting $5.5 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.8x on those 2028 earnings, down from 25.9x today. This future PE is lower than the current PE for the US Medical Equipment industry at 29.7x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.48%, as per the Simply Wall St company report.

Medtronic Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's gross margin declined by 80 basis points year-over-year in the most recent quarter, driven by near-term business mix headwinds in core growth segments (CAS and Diabetes), and while these are expected to improve, continued margin pressure due to product mix or manufacturing ramp challenges could negatively impact long-term net margins and earnings.
Segments of Medtronic's portfolio, such as U.S. Diabetes and parts of MedSurg and Neuroscience, are currently underperforming with structural headwinds (e.g., slower U.S. Diabetes ramp, softness in Surgical due to procedural shifts and competitive robotics), suggesting that broader base business growth may remain below trend despite pockets of robust innovation, which could limit overall revenue and earnings growth if not offset.
Heavy investment into R&D and commercial ramp-ups in new areas (e.g., hiring for CAS/Ardian, extensive Diabetes innovation cycle) while necessary for growth, may outpace returns if new product launches are delayed or fail to gain anticipated market traction, potentially compressing profitability and generating higher operating expenses without proportional revenue uplift.
Exposure to significant execution risks in major new product ramp-ups-specifically CAS/PFA systems, Ardian for hypertension, Hugo Surgical robotics, and new CGM sensors-where manufacturing challenges, regulatory delays, or slower-than-expected adoption could impede expected sequential revenue acceleration and earnings improvement.
Although Medtronic anticipates the Diabetes spin-off will enhance margins and growth, the successful IPO/split is subject to operational, regulatory, and market risks, and underperformance in the soon-to-be separated Diabetes business or delays in execution could temporarily depress consolidated earnings and create short-term uncertainty in revenue visibility and shareholder returns.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $98.629 for Medtronic based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $112.0, and the most bearish reporting a price target of just $82.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $40.0 billion, earnings will come to $6.3 billion, and it would be trading on a PE ratio of 25.8x, assuming you use a discount rate of 8.5%.
Given the current share price of $94.07, the analyst price target of $98.63 is 4.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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