Truist Securities lifts Medtronic stock target to $92, maintains hold

On Thursday, Truist Securities adjusted its outlook on Medtronic , Inc. (NYSE:MDT), increasing the price target to $92 from the previous $90 while maintaining a Hold rating on the shares. The revision reflects a response to Medtronic’s reported organic revenue growth of 5.4%, which surpassed the consensus estimate of 4.6%. Currently trading at $81.20, with a market capitalization of $104.16 billion, InvestingPro analysis indicates the stock is trading below its Fair Value, presenting a potential opportunity for investors. Despite this positive performance, the company’s margins did not meet expectations, and its guidance for fiscal year 2026 earnings per share (EPS) was below consensus, largely due to the impact of tariffs. The company maintains a solid gross profit margin of 65.3%, though InvestingPro data shows 7 analysts have recently revised their earnings expectations downward for the upcoming period.

The firm highlighted that the most significant announcement from Medtronic was the planned separation of its Diabetes business within the next 18 months. Management anticipates that this move will result in high single-digit or better EPS growth for fiscal year 2027. According to Truist Securities, the spin-off is expected to be beneficial for the company’s margins and EPS. Notably, Medtronic boasts an impressive dividend history, having maintained payments for 49 consecutive years with a current yield of 3.32%. The separation will enable management to better allocate resources, including an increase in research and development spending, towards businesses with higher margins.

Truist Securities sees these strategic steps as the correct approach for Medtronic to achieve long-term, sustainable, and profitable growth. However, the firm emphasizes that successful execution is crucial. The price target increase to $92 is based on a higher price-to-earnings ratio, reflecting an improved margin profile anticipated after the business split.

While the firm has become more constructive on Medtronic’s outlook following these developments, it has chosen to maintain a Hold rating on the stock. The rationale behind this decision is the expectation of more significant EPS growth and upside potential in other large-cap coverage areas. InvestingPro analysis reveals a GOOD overall Financial Health Score of 2.78, with particularly strong metrics in profitability and cash flow management. For deeper insights into Medtronic’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Medtronic, Inc. announced its fourth-quarter fiscal year 2025 earnings, which exceeded expectations with a 1% revenue beat and a 3% earnings per share (EPS) beat, primarily driven by its Cardiovascular division. The company provided initial guidance for fiscal year 2026, indicating an approximate 4% year-over-year EPS growth, excluding tariff impacts. Medtronic plans to separate its diabetes segment, a strategic move expected to streamline operations. Analyst firms have responded with mixed adjustments to their price targets: RBC Capital Markets lowered its target to $101 but maintained an Outperform rating, while Stifel kept a Hold rating with an $87 target. Bernstein reiterated an Outperform rating with a $93 target, emphasizing Medtronic’s consistent revenue growth and potential for new product launches. Evercore ISI adjusted its target from $105 to $103, also maintaining an Outperform rating. Analysts noted the impact of tariffs and product mix changes on Medtronic’s financial outlook, yet expressed confidence in the company’s strategic initiatives and long-term growth potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.