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Key Points
- Medtronic is amid a market reversal that can double-digits to its stock price while it pays a market-beating dividend yield.
- Analyst and institutional activity highlight the value and yield combination, which is attractive compared to the broader market.
- Catalysts include improving operational efficiency and margin health, new product launches, and traction in robotics.
Medtronic’s (NYSE: MDT) stock price is amid a textbook reversal, having formed a Head & Shoulders Pattern and broken to fresh highs, confirming the baseline as a critical pivot point. The question now is how high the stock might rise. The reversal is driven by an improving growth outlook, profitability, capital return, and market sentiment, which provides a solid support base in 2026.
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Institutions and Analysts Buy Into Medtronic’s Growth Outlook
Institutions, representing the largest body of investment capital, own more than 80% of this stock and have been accumulating it for several quarters. MarketBeat data reveals a bullish balance for five consecutive quarters, a $2-to-$1 bias in favor of buyers, and buying activity ramping at year's end 2025 and in early 2026, aligning with the stock price action. Assuming the bullish bias persists, MDT's stock price has nowhere to go but up.
Analysts, representing private capital and, to a degree, retail market sentiment, rate this stock as a Moderate Buy. Analyst coverage has been increasing alongside an improving outlook, and the price target trend was bullish ahead of the fiscal Q3 (FQ3) release. (Note that Medtronic's fiscal reporting period is behind the calendar year.)
Forecasting a 10% upside at the consensus and another 10% at the high end, the revision trends also align with the stock price action. While the FQ3 release and guidance update failed to catalyze a rally, the data aligned with expectations, which were driving an uptrend to begin with. The likely outcome is that analyst trends remain solid through the next quarter, underpinning price action.
The technical targets provide another convergence in the outlook. The price targets, now that the reversal pattern is confirmed, assume a movement equal to the range's dollar magnitude as the base case and a percentage movement as the bull case. These targets put MDT stock in the range of $118-$124, nicely bracketing the high-end analyst target of $120. The only question is timing, and the charts suggest this move can happen before mid-year.
Medtronic Affirms Long-Term Growth Targets: Outperforms in FQ3
Medtronic had a solid quarter, with revenue of $9 billion outpacing consensus estimates by a slim margin. Strength was seen across the enterprise, with 6% organic growth compounded by foreign exchange tailwinds. Cardio was the strongest segment, up nearly 14% and 10.6% organically, followed by 8.3% organic growth in Diabetes, 2.7% in Medical Surgical, and 2.5% in Neurosciences.
Medtronic experienced margin pressures, especially from tariffs, but none were worse than expected. The net result was an adjusted operating margin of 24.1% and adjusted earnings per share (EPS) of $1.36. The adjusted EPS outpaced estimates by 150 basis points, suggesting forward guidance could be cautious. Medtronic’s guidance was reaffirmed, expecting revenue growth in the range of 5.5% and full-year adjusted EPS of $5.64 at the midpoint. The sticking point is that this guidance falls short of the consensus, but is easy to overlook given the slim, 1-cent miss.
More pertinent details include the long-term outlook, which is maintained, and the cash flow, which is sufficient to sustain the capital return. The capital return outlook includes dividends and share repurchases, with the dividend yielding approximately 2.8% as of mid-February and repurchases reducing the count annually. Incentives for investors include a payout ratio of about 50% and a history of distribution increases, which has the company on track for Dividend King status this decade.
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Medtronic: Many Catalysts in 2026
Medtronic stock has several catalysts that could drive it higher in 2026. Not only are critical segments, including Cardiovascular, experiencing accelerated growth, but new products and expanding approvals, such as the Symplicity Spyral RDN system and the Hugo robotic systems, are also driving business. Meanwhile, activists are pushing for operational changes.
The combined impact could result in outperformance in the company's fiscal Q4, full-year 2025, and 2026, with expanding margins and improved capital returns.
Elliott Investment Management, which emerged as a major shareholder in 2025, seeks to improve efficiency, accelerate growth, and boost the stock valuation. Trading at 17X earnings, MDT stock is a bargain relative to average S&P 500 companies and med tech peers. Assuming an advance to align with averages, MDT stock could rise as many as five handles to trade near 22X earnings, a valuation suggesting a price point near $125.
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