Medtronic has challenged investors’ patience for a long time, but recent results show a real change. Revenue jumped 9.9% in the fourth quarter to $9.7 billion, pushing full-year growth to 8.4%. That’s the best annual sales increase in ten years. Even so, the stock is still priced much lower than its peers and its own past averages. Here’s what’s behind the recent momentum and why the stock could catch up.
The cardiovascular division stands out. It makes up about 39% of Medtronic’s total sales and grew revenue by 10% to $3.8 billion last quarter. Cardiac Ablation Solutions saw global growth of 78% and an even bigger jump of 124% in the U.S., helped by FDA approval for two pulsed field ablation platforms. Boston Scientific, a competitor, has pointed to losing PFA market share as a challenge. Its stock has dropped 51% so far this year.
The Hugo robotic-assisted surgery system is Medtronic’s biggest long-term opportunity. It launched in 2025 and has U.S. clearance for urology. Medtronic is also seeking approval for Hugo in general surgery and gynecology. Hugo costs 15% to 30% less than Intuitive Surgical’s da Vinci system and is aimed at a market expected to more than triple to over $54 billion in the next ten years.
Medtronic is trading at 13.5 times forward earnings, which is below its 10-year average of almost 16 times. Its price-to-sales ratio is 2.8, while the peer average is 4. The company offers a 3.7% dividend yield and has raised its dividend for 49 years in a row, which is unusual for a company growing this fast. Management expects organic revenue growth of 6.75% to 7.25% and adjusted earnings between $5.90 and $6 per share. RBC Capital Markets has an Outperform rating on the stock with a $118 price target.
