Is Medtronic Stock a Buy?

Medical device giant Medtronic (MDT 0.44%) has been somewhat of a stock market laggard over the past five years, partly due to pandemic-related disruptions. Even beyond this global issue, the healthcare giant has had trouble growing its revenue and earnings fast enough to excite investors. However, if its latest earnings report is any indication, Medtronic seems to be moving in the right direction, at least within what will arguably become its most important business in terms of driving up top-line growth.

Let’s find out whether it’s worth it to buy Medtronic’s shares right now, given these developments.

Its fastest-growing segment strikes again

Medtronic’s business is diversified. The company boasts dozens of devices across four main segments: Medical surgical, neuroscience, cardiovascular, and diabetes. Though Medtronic records consistent earnings, its revenue growth hasn’t been that impressive, a phenomenon that dates back to before the pandemic.

In the latest report, for the first quarter of its fiscal 2025, ended on July 26, Medtronic’s revenue increased by 2.8% year over year to $7.9 billion. Medtronic’s best-performing segment in this department was diabetes. Sales within this unit came in at $647 million, about 11.8% higher than the year-ago period.

Diabetes is Medtronic’s smallest segment by revenue, but it has been growing faster than the rest of its business for a while. The recent boost is partly due to Medtronic’s newest insulin pump, the MiniMed 780G, which earned clearance in the U.S. in April 2023. One of this device’s biggest perks is that it features an automated 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 is even more good news for Medtronic. The company recently earned U.S. clearance for a continuous glucose monitoring (CGM) system called Simplera. It also announced a partnership with Abbott Laboratories, one of the world leaders in the CGM market. Abbott will be responsible for providing a CGM compatible with Medtronic’s devices, which will 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 future is slowly and surely taking shape

Diabetes is a worldwide epidemic that affects roughly half a billion adults worldwide. And some have predicted that this number will keep rising as it has in the past few decades. There will continue to be a dire need for products that help simplify the lives of these patients. Medtronic is one of the more prominent companies in this niche, which could provide it with a significant long-term tailwind. It won’t happen overnight, but it is already underway.

However, that won’t be Medtronic’s only growth opportunity. The company is still testing its robotic-assisted surgery (RAS) device, the Hugo system. As Medtronic noted last year, robotic surgeries account for less than 5% of the total procedures that could be performed as such, so there is a vast runway in this field, too. Again, it might take a few more years before the Hugo is cleared in the U.S., where it is currently being tested, although it is used in some countries abroad.

So, it will take some patience, but Medtronic’s financial results, which aren’t horrible right now, should improve eventually. Of course, the healthcare giant remains a top dividend pick. It has now raised its payouts for 47 consecutive years. It is inching closer toward the highly coveted Dividend King status. Medtronic has a forward yield of 3.13% compared to the S&P 500‘s average of 1.32%. The company is a reliable, steady dividend payer to own for a long time.