Medtronic Earnings Preview: Is MDT Stock Poised to Rally?

Introduction

Medtronic [MDT] is a major medical technology company, operating in 150 countries to deliver therapies for 70 different health conditions, including diabetes and Parkinson’s disease.

MDT stock has had a strong year to date, but this jump only brings the share price back in line with late-October 2024 levels.

With major research into biotechnology-focused treatments and personalized healthcare, will Q3 2024 results on February 18 live up to the company’s innovation ambitions?

What’s New with MDT Stock?

Q2 adjusted earnings for MDT saw a 4% drop year-over-year to $1.25, despite $8.4bn revenues beating the Zacks consensus estimate by 1.75%. 

Since then, Medtronic has received FDA clearance for its InPen application, which works with its newest continuous glucose monitor. This is significant, as it is the first app on the market to be approved to recommend corrections for missed or inaccurate insulin doses. Not only could this revolutionize care for those living with diabetes, it also positions MDT as an innovative major player in this space.

Similarly, the firm has received CE Mark approval for BrainSense Adaptive, a therapy for those with Parkinson’s disease. The product’s brain-computer interface technology enables patients to benefit from personalized deep brain stimulation both in a clinical environment and in their day-to-day lives. 

Investors might be heartened by the appointment of Thierry Piéton as Chief Financial Officer at Medtronic. 

Leaving Renault Group [RNLSY], Medtronic CEO Geoff Martha has lauded him as “a strategic, creative operationally focused, experienced CFO with a proven track record of delivering innovation-driven growth”. Indeed, Renault achieved its highest-ever operating margins under his leadership. 

How Has MDT Stock Performed Recently?

Following Q3 earnings, MDT’s share price dipped 3.97% to November 20’s close. However, MDT’s reaction to lackluster Q2 results was nothing compared to the wider drop of 12.98% between a year-high on October 23 and December 30.

Rather than a specific news trigger, the dip seems to have been caused by fairly generic headwinds, among them cost escalation and currency effects.

Since the dip, MDT stock has pulled off a 16.58% rally to February 14’s close. Even so, it sits 31.70% below its all-time high close, reached back on September 9, 2021.

Investors will no doubt be looking to gauge whether the stock has the capacity to regain these highs in the future.

Medtronic’s Key Competitors

Abbott Laboratories’ [ABT] stock has, broadly, followed a similar trajectory to MDT in recent years, with its all-time high reached on December 27, 2021, followed by a rocky couple of years. It is, however, approaching its former highs.

ABT stock has been boosted by strong Q4 and full year results for 2024, released on January 22. With Q4 sales of $11bn and organic sales growth for the underlying base business up 9.6% for the full year, it is easy to see why the stock bounced 9.89% in the five days following the news.

Stryker [SYK] offers a different story over the five-year timeframe, having risen fairly consistently — notwithstanding a brief dip in spring 2022 — since 2020, and indeed since its incorporation in 1979.

While Stryker does offer some neurosurgical, neurovascular and spinal devices, the bulk of its production is focused on orthopedic, surgical, and patient handling equipment. The secure demand for items such as transport chairs and joint solutions may go some way to explaining the more stable performance of SYK over time.

Source: Yahoo Finance

Based on the fundamentals above, MDT might appear set for longer-term gains, while SYK could offer a slightly riskier play for more potential reward, if the established company can hit its punchy growth target.

However, investors might be underwhelmed by Medtronic’s projected revenue growth, given the firm’s focus on expansion and innovation.

MDT Stock: The Investment Case

While the past 12 months have been choppy for Medtronic’s share price, 2025 has been positive so far, with MDT stock up 16.19% for the year to date.

What are the potential tailwinds that could see this rally continue, and are there any clouds on the horizon?

The Bull Case for MDT Stock

With 10 analysts rating MDT ‘buy’, five ‘overweight’, and 17 ‘hold’, versus just two ‘sell’ ratings, as reported by Barron’s, what are the positives encouraging analysts on MDT stock?

Medtronic has cornered important sections of the health-tech market, including making market-first developments in diabetes and Parkinson’s disease care.

If the firm is able to continue delivering such an exciting pipeline, alongside significant acquisitions such as its purchase of Nanovis’ nanotechnology for use in spinal implants, then the strength of its underlying business may be enough to carry it through future periods of unfavorable macroeconomic conditions.

Investors who are comfortable in the presence of big-name institutional investors might be encouraged to know that Ken Fisher has increased his fund’s holdings in MDT over the past six consecutive quarters.

Similarly, Ken Griffin has boosted his holdings over the past four quarters by significant amounts. In Q1 2024, he increased his holding by 1265.3%, followed by bumps of 39.2%, 453.4% and 2.6% in the following three periods.

It would appear these notable names are banking on a rebound for MDT.

The Bear Case for MDT Stock

While there are definite reasons for optimism ahead of MDT’s earnings call, there are certainly potentially adverse macroeconomic conditions to consider before investing in Medtronic.

Medtronic has seen the impact of significant foreign exchange hedges on its earnings growth in recent years, and the effects of this have been seen on the stock’s performance despite solid underlying business fundamentals.

While the situation looks set to improve in the latter half of 2025 and into 2026, it is certainly a factor to consider in the coming months.

The other thing to consider before investing in MDT stock is the global picture more broadly, with unpredictable inflation movements and potentially recessionary markets around the world.

As a product-focused company, Medtronic relies upon market demand for its products — particularly its more expensive, innovative offerings — and, while healthcare spending is generally fairly stable, there is always a risk that economic crises might lead to spending cuts and a resultant hitch in Medtronic’s revenue.

Conclusion

As investors prepare to receive Q3 earnings from Medtronic this week, they will no doubt be focused on the profitability of the business, as well as any indication of how the macroeconomic situation is being mitigated by the company.