Medtronic Stock (MDT) Bounces Off $90 Ahead of Earnings – Bulls Eyeing Breakout

Medtronic plc (MDT), a global leader in medical technology, is trading higher today, with the MDT stock price sitting up 1.25% at $97.07, having recently bouncing off the $90 support level. This upward trajectory has sparked renewed optimism, with many analysts suggesting a potential breakout is on the horizon, especially with earnings due in the morning.

Analysts project that Medtronic's upcoming earnings report will reveal an earnings per share (EPS) of $1.31, slightly up from $1.26 in the same period last year. Revenue is estimated to reach approximately $8.86 billion, indicating a year-over-year sales growth of 5.48%.

Several key developments have influenced Medtronic's stock performance in recent months. The most significant was the announcement on May 21st, regarding the spin-off of its Diabetes business into a separate, standalone company. This strategic decision aims to sharpen Medtronic's focus on higher-margin growth areas while allowing the “New Diabetes Company” to aggressively pursue innovation in diabetes care. The separation is projected to immediately improve Medtronic's adjusted gross margin by approximately 50 basis points and adjusted operating margins by about 100 basis points, with immediate accretion to adjusted EPS.

In the first quarter of fiscal year 2026, Medtronic reported revenue of $8.6 billion, an 8.4% increase as reported and 4.8% organic growth. GAAP diluted EPS stood at $0.81 (up 1%), while non-GAAP diluted EPS reached $1.26 (up 2%). The Cardiovascular Portfolio led growth with a 7.0% organic increase, and the Diabetes business also showed strong performance with 7.9% organic growth. Following these results, Medtronic raised its fiscal year 2026 EPS guidance to $5.60-$5.66, up from the previous range of $5.50-$5.60.

However, the market reaction to the earnings report on August 19th, saw the stock decline by approximately 3.6%. Analysts attributed this to the market's potentially unmet expectations, despite the company's growth.

Medtronic has also been proactive in enhancing shareholder value through strategic governance changes. The appointment of two new independent directors, John Groetelaars and Bill Jellison, to the Board, along with the establishment of a Growth Committee and an Operating Committee, signals a commitment to optimizing operational performance and margin expansion. These initiatives followed constructive engagement with Elliott Investment Management, one of Medtronic's largest investors.

Further bolstering Medtronic's outlook is the FDA approval for its Altaviva™ device in September. This minimally invasive implantable tibial neuromodulation (ITNM) therapy for treating urge urinary incontinence positions Medtronic as the only company offering a complete portfolio of neuromodulation therapies for bladder control issues.

On September 19th, Medtronic successfully closed a public offering through its subsidiary Medtronic, Inc., consisting of €1.5 billion in senior notes. The net proceeds will be used to repay existing senior notes, demonstrating proactive debt management.

Medtronic's advancements in robotic-assisted surgery are also noteworthy. The launch of the Embrace Gynecology U.S. IDE clinical study to evaluate the Hugo™ robotic-assisted surgery system for hysterectomy procedures marks a significant step forward. The company notes Hugo RAS is in clinical use in over 30 countries and is CE marked in the EU; in the U.S., the device remains investigational.

While the prevailing sentiment is bullish, a closer look reveals potential headwinds. The spin-off of the Diabetes business, while strategically sound, introduces a period of uncertainty. Successfully establishing the “New Diabetes Company” as a viable entity will require significant investment and management expertise.

Moreover, the market's initial disappointment with the recent earnings report underscores the high expectations placed on Medtronic. The company must consistently deliver strong financial results to maintain investor confidence. The Hugo RAS system is still investigational in the U.S. market. It may not gain approvals in time or gain the market share to make it a worthwhile investment.