Medical Device Giant Medtronic (NYSE: MDT) Medtronic has been a bit of a laggard in the stock market over the past five years, in part due to the turmoil associated with the pandemic. Even outside of that global issue, the healthcare giant has struggled to grow revenue and earnings quickly enough to excite investors. However, if its latest earnings report is any indication, Medtronic appears to be moving in the right direction, at least in what will arguably become its most important business in terms of driving top-line growth.
Let’s find out if it’s worth buying Medtronic stock now, given these developments.
Its fastest growing sector strikes again
Medtronic’s business is diverse. The company boasts dozens of devices across four major segments: medical surgery, neuroscience, cardiovascular, and diabetes. While Medtronic has been posting steady profits, its revenue growth has been unimpressive, a phenomenon that predates the pandemic.
In the latest report, for the first quarter of fiscal 2025, which ended July 26, Medtronic’s revenue rose 2.8% year over year to $7.9 billion. The diabetes segment was the best performing segment in the division. Sales within the unit were $647 million, up 11.8% from the same period last year.
Diabetes is Medtronic’s smallest segment by revenue, but it has been growing faster than the rest of its business for some time. The recent surge is due in part to Medtronic’s newest insulin pump, the MiniMed 780G, which won U.S. approval in April 2023. One of the biggest advantages of this device is that it features an automated insulin delivery (AID) system that makes life easier for people with diabetes. For the past two quarters, the 780G has been the highest-ranked AID device by dQ&A, a diabetes-focused research firm.
There’s more good news for Medtronic. The company recently won U.S. approval for its continuous glucose monitoring (CGM) system called Simplera. It also announced a partnership with Abbott Laboratoriesa world leader in the CGM market. Abbott will be responsible for providing CGM compatible with Medtronic devices, which will be sold exclusively by the latter. In other words, Medtronic continues to innovate and drive its diabetes business forward.
Within another five years, it is expected to account for a much larger share of its total revenues, and contribute to improved overall growth.
The future is slowly but surely taking shape.
Diabetes is a global epidemic that affects nearly half a billion adults worldwide. Some predict that number will continue to rise as it has over the past few decades. There will always be a great need for products that help make life easier for these patients. Medtronic is one of the most prominent companies in this space, and that could provide a big boost in the long run. It won’t happen overnight, but it’s already happening.
But that won’t be the only growth opportunity ahead for Medtronic. The company is still testing its robotic-assisted surgery (RAS) system, known as the Hugo system. As Medtronic noted last year, robotic surgeries account for less than 5% of all operations that can be performed this way, so there’s plenty of room for it, too. Again, it could be a few more years before Hugo is approved in the U.S., where it’s currently being tested, though it’s being used in some countries abroad.
So, it will take some patience, but Medtronic’s financial results, which aren’t too bad right now, are expected to improve eventually. Of course, the healthcare giant remains the go-to dividend payer. It has now raised its payout for 47 consecutive years. It is slowly approaching the goal that everyone has long desired. King of profits Medtronic has a forward yield of 3.13% compared to Standard & Poor’s 500The company’s average dividend yield is 1.32%. The company is a reliable and consistent dividend paying stock that can be owned for a long time.
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Prosper Junior Pacini The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a position in and recommends Abbott Laboratories. The Motley Fool recommends Medtronic and recommends the following options: Buy $75 Jan 2026 Medtronic and Sell $85 Jan 2026 Medtronic. The Motley Fool has Disclosure Policy.
Is Medtronic stock worth buying? Originally posted by The Motley Fool