Is Medtronic’s Steady 2025 Climb Justified After Strong Diabetes Device Results?

Trying to make sense of Medtronic’s share price? You are not alone. Whether you are a long-term investor or a newcomer sizing up your options, the stock’s recent trajectory makes for an intriguing story. Over the past year, Medtronic shares have climbed 7.2%, capping off a three-year gain of 15.2%. This reflects a steady performance in a market where certainty feels rare, and such momentum may attract investors interested in stability and growth potential. While the five-year return is essentially flat at -0.2%, some believe the company’s value is just beginning to be unlocked.

Lately, broader market optimism in healthcare and shifts in risk perception have influenced Medtronic’s movement. There is renewed interest in established medical device makers that can weather uncertainty and adapt to changing clinical trends. As the market recalibrates, some positive developments may be reflected in the stock price.

But the bigger question is whether Medtronic is actually undervalued compared to what it should be worth. According to our multi-check valuation system, Medtronic receives a value score of 4, meaning it passes 4 of 6 undervaluation checks. This is a solid mark and suggests there could be more room to run.

If you are wondering where to go from here, you are in the right place. Next, we will break down the main valuation methods used to judge Medtronic’s stock. Also, if you stick around to the end, we have a smarter approach to share that goes beyond just the numbers.

Why Medtronic is lagging behind its peers

Approach 1: Medtronic Cash Flows

The Discounted Cash Flow (DCF) model estimates a company's value by forecasting all expected future cash flows and discounting them back to the present. This process takes into account the time value of money and helps investors look beyond current earnings to focus on the long-term outlook.

For Medtronic, the latest twelve months’ Free Cash Flow is $5.4 billion. Analyst consensus points to steady growth, with forecasts reaching $6.9 billion by the year ending April 2028. Looking ahead to a full decade, Simply Wall St extrapolates that annual Free Cash Flow could rise to nearly $9.4 billion by 2035, although these numbers are model-based estimates rather than direct analyst projections.

By summing these projected long-term cash flows and discounting them accordingly, Medtronic’s intrinsic value is estimated at $98.01 per share. Comparing this to the current share price, the stock appears to be about 5.4% undervalued, suggesting it is trading within a relatively narrow range around its calculated value.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Medtronic.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Medtronic's DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Medtronic Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation measure, especially for profitable companies like Medtronic. It helps investors gauge how much the market is willing to pay for a dollar of current earnings. This makes it a quick way to compare value across different companies.

What counts as a “fair” PE ratio often depends on expectations for future growth and the level of risk that investors perceive. Higher growth prospects tend to justify a higher PE, while increased uncertainty will usually drive it lower.

Currently, Medtronic trades at a PE ratio of 25.5x. This is below both the medical equipment industry average of 30.3x and the peer group average of 54.0x. This suggests the stock is priced more conservatively than many competitors.

Simply Wall St’s proprietary “Fair Ratio” pegs Medtronic’s fair PE at 28.2x, which is calculated using a blend of factors unique to the company. These include its earnings growth outlook, profit margins, the broader medical device industry context, and market cap. Unlike raw industry or peer comparisons, the Fair Ratio offers a tailored benchmark that accounts for specific business strengths and risks. This provides a more balanced perspective on value.

Medtronic’s actual PE of 25.5x is very close to its Fair Ratio of 28.2x. This indicates the stock is trading in line with its fundamentals based on this methodology.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose Your Medtronic Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. Narratives are a more powerful approach that allows you to take the story you believe about a company—your perspective on its future innovation, risks, and opportunities—and directly connect it to financial forecasts and a fair value calculation.

This means you are not limited to standard valuation formulas or analyst averages. You can align your investment strategy with your unique view of Medtronic, making your decisions truly personal and flexible. Narratives are quick and accessible for everyone, right within Simply Wall St’s Community page, where millions of investors are already sharing and updating their insights.

With Narratives, you decide when Medtronic looks like a buy or a sell by comparing your fair value to the current price. Your view adapts automatically when new earnings or news is released, so you are always working with the latest picture. For example, some investors, seeing major upside from robotics and new diabetes tech, estimate Medtronic’s fair value at $112. Others, focused on underperforming segments and execution risks, call it as low as $78, all depending on the story they believe.

Do you think there's more to the story for Medtronic? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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