Medical device giant Medtronic (NYSE: MDT) has been somewhat of a stock market laggard over the past five years, partly on account of pandemic-related disruptions. Even beyond this global issue, the healthcare giant has had trouble growing its revenue and earnings fast enough to excite investors. Nonetheless, if its latest earnings report is any indication, Medtronic appears to be moving in the best direction, at the very least inside what’s going to arguably grow to be its most significant business when it comes to driving up top-line growth.
Let’s discover whether it’s value it to purchase Medtronic’s shares straight away, given these developments.
Its fastest-growing segment strikes again
Medtronic’s business is diversified. The corporate boasts dozens of devices across 4 predominant segments: Medical surgical, neuroscience, cardiovascular, and diabetes. Though Medtronic records consistent earnings, its revenue growth hasn’t been that spectacular, a phenomenon that dates back to before the pandemic.
In the newest report, for the primary quarter of its fiscal 2025, ended on July 26, Medtronic’s revenue increased by 2.8% 12 months over 12 months to $7.9 billion. Medtronic’s best-performing segment on this department was diabetes. Sales inside this unit got here in at $647 million, about 11.8% higher than the year-ago period.
Diabetes is Medtronic’s smallest segment by revenue, but it surely has been growing faster than the remaining of its business for some time. The recent boost is partly on account of Medtronic’s newest insulin pump, the MiniMed 780G, which earned clearance within the U.S. in April 2023. One in every of this device’s biggest perks is that it features an automatic insulin delivery (AID) system that makes lives easier for diabetes patients. For the past two quarters, the 780G has been the top-rated AID by dQ&A, a diabetes-focused research company.
There’s much more excellent news for Medtronic. The corporate recently earned U.S. clearance for a continuous glucose monitoring (CGM) system called Simplera. It also announced a partnership with Abbott Laboratories, certainly one of the world leaders within the CGM market. Abbott shall be chargeable for providing a CGM compatible with Medtronic’s devices, which shall be sold exclusively by the latter. In other words, Medtronic continues to innovate and move its diabetes business forward.
In five more years, it should account for a much larger share of its total revenue and contribute to improving top-line growth.
The long run is slowly and surely taking shape
Diabetes is a worldwide epidemic that affects roughly half a billion adults worldwide. And a few have predicted that this number will keep rising because it has up to now few a long time. There’ll proceed to be a dire need for products that help simplify the lives of those patients. Medtronic is certainly one of the more outstanding corporations on this area of interest, which could provide it with a major long-term tailwind. It won’t occur overnight, but it surely is already underway.
Nonetheless, that will not be Medtronic’s only growth opportunity. The corporate continues to be testing its robotic-assisted surgery (RAS) device, the Hugo system. As Medtronic noted last 12 months, robotic surgeries account for lower than 5% of the whole procedures that might be performed as such, so there’s an enormous runway on this field, too. Again, it’d take a couple of more years before the Hugo is cleared within the U.S., where it’s currently being tested, even though it is utilized in some countries abroad.
So, it is going to take some patience, but Medtronic’s financial results, which are not horrible straight away, should improve eventually. After all, the healthcare giant stays a top dividend pick. It has now raised its payouts for 47 consecutive years. It’s inching closer toward the highly coveted Dividend King status. Medtronic has a forward yield of three.13% in comparison with the S&P 500‘s average of 1.32%. The corporate is a reliable, regular dividend payer to own for a very long time.
Do you have to invest $1,000 in Medtronic straight away?
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Abbott Laboratories. The Motley Idiot recommends Medtronic and recommends the next options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Idiot has a disclosure policy.
Is Medtronic Stock a Buy? was originally published by The Motley Idiot