Medtronic Faces Challenges Amid Market Fluctuations

The recent market rally, led by tech giants like NVIDIA and Tesla, has lifted the benchmark index to a two-week record high. This development has provided a much-needed reprieve for investors and may create opportunities for stocks like Medtronic (MDT) to gain traction.

Over the past few months, Medtronic’s stock performance has been sluggish, declining by 0.8%, reflecting broader industry trends. Factors such as aggressive tariff policies, ongoing trade tensions, and inflationary pressures have contributed to this decline. In comparison, other major players in the MedTech sector, including Boston Scientific (BSX) and Abbott (ABT), have also struggled. Boston Scientific rose slightly by 0.3%, while Abbott fell by 0.6%. For context, the broader industry experienced a decline of 2.6%, and the S&P 500 index decreased by 5% during this period.

Two-Month Stock Performance Overview

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From a technical standpoint, MDT is currently trading below its 14-day and 50-day moving averages, indicating a bearish trend. This situation may deter momentum-driven investors and introduce short-term volatility in its stock price.

MDT Stock’s Position Relative to Moving Averages

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Concerns surrounding trade conflicts and inflation have impacted the MedTech sector significantly, with global operators like Medtronic feeling the pressure. Notably, NVIDIA shares climbed over 3%, and Tesla surged nearly 12% yesterday, fueled by growing investor optimism that the upcoming tariff measures may be less severe than previously anticipated. This sentiment shift could alleviate concerns regarding economic disruptions and inflation that currently affect Medtronic.

MDT’s Long-Term Prospects Remain Strong

Medtronic continues to strategically enhance its global footprint to fulfill the rising demand for advanced medical devices. In the Cardiovascular segment, the company is expanding its market share, particularly through new product launches in Cardiac Rhythm Management (CRM) and Structural Heart.

Additionally, Medtronic’s Hypertension sector is poised for significant growth, particularly with its Simplicity blood pressure procedure. The Centers for Medicare & Medicaid Services (CMS) have recently confirmed the inpatient payment, along with the outpatient transitional pass-through payment, for the Symplicity Spyral renal denervation catheter. This device will be utilized in the procedure, ensuring Medicare coverage within the next eight months and facilitating quicker adoption.

In the MedSurg division, despite some distributor disruptions, Medtronic is advancing the production of its Hugo robotic-assisted surgery platform. The Neuroscience portfolios continue to contribute positively, while the company’s Pacing division is benefiting from the growth of the Micra leadless pacemaker. Ongoing innovations and market expansion initiatives are helping mitigate the impacts of inflation and supply chain disruptions. Furthermore, MDT’s strong liquidity positions it well to meet its near-term debt obligations.

Looking ahead, Medtronic anticipates that revenue and EPS growth will gain momentum in the fourth quarter of fiscal 2025, driven by its diverse innovation pipeline, market expansion efforts, and operational leverage, which aims to deliver sustained value for shareholders.

Attractive Valuation for Investors

Currently, MDT stock is trading at a discount relative to the Medical Products industry. Its forward 12-month price-to-earnings (P/E) ratio stands at 15.56, compared to the industry average of 21.78. Additionally, MDT is favorably valued against peers such as BSX, which has a forward P/E of 34.97, and ABT, with a forward P/E of 24.09.

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Conclusion: Hold MDT Stock

Medtronic presents a compelling case in the MedTech arena, bolstered by its aggressive expansion strategy, robust product pipeline, and solid fundamentals. The stock’s current discount compared to industry peers provides a favorable entry point for investors looking for substantial upside potential.

However, ongoing macroeconomic issues, particularly trade tensions and inflation, limit this Zacks Rank #3 (Hold) stock’s near-term upward movement. Additionally, Medtronic’s Medical Surgical segment is facing challenges related to shifts in distributor buying patterns—this issue is expected to resolve as fiscal 2026 approaches. Consequently, while existing shareholders may maintain their positions, new investors should consider waiting for the stock to stabilize before entering.

You can view the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Abbott Laboratories (ABT): Free Stock Analysis report.

Boston Scientific Corporation (BSX): Free Stock Analysis report.

Medtronic PLC (MDT): Free Stock Analysis report.

NVIDIA Corporation (NVDA): Free Stock Analysis report.

Tesla, Inc. (TSLA): Free Stock Analysis report.

This article was originally published on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.