Is Medtronic stock a buy?

The medical device giant Medtronic (MDT 0.44%) has been somewhat of a laggard in the stock market over the past five years, partly due to pandemic-related disruptions. Even beyond this global problem, the healthcare giant has had trouble growing its revenue and earnings fast enough to excite investors. However, if its latest earnings report is any indication, Medtronic appears to be headed in the right direction, at least in what will likely become its most important business in terms of driving topline growth.

Let’s find out if it’s worth buying Medtronic stock right now given these developments.

Its fastest growing segment strikes again

Medtronic’s businesses are diversified. The company boasts dozens of devices in four main segments: medical surgery, neuroscience, cardiovascular and diabetes. While Medtronic is posting solid earnings, its revenue growth hasn’t been all that impressive, a phenomenon that predates the pandemic.

In its most recent report, for the first quarter of fiscal 2025, which ended July 26, Medtronic’s revenue rose 2.8 percent year over year to $7.9 billion. Medtronic’s best performing segment in this department was diabetes. Sales within this unit totaled $647 million, about 11.8% higher than in the year-ago period.

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 boost is due in part to Medtronic’s newest insulin pump, the MiniMed 780G, which received US approval in April 2023. One of the biggest advantages of this device is that it has an automated insulin delivery system (AID) that makes life easier for diabetes. the patients. For the past two quarters, 780G has been the top-rated AID by dQ&A, a diabetes research company.

There is even more good news for Medtronic. The company recently obtained US clearance for a continuous glucose monitoring (CGM) system called Simplera. It also announced a partnership with Abbott Laboratoriesone of the world leaders in the CGM market. Abbott will be responsible for providing a CGM compatible with Medtronic devices, which will be sold exclusively by Medtronic. In other words, Medtronic continues to innovate and advance its diabetes business.

In another five years, it should represent a much larger share of its total revenue and help improve core growth.

The future is taking shape slowly and surely

Diabetes is a worldwide epidemic affecting approximately half a billion adults worldwide. And some have predicted that this number will continue to grow as it has in recent decades. There will continue to be a great need for products to help simplify the lives of these patients. Medtronic is one of the most prominent companies in this niche, which could give it a significant long-term tailwind. It won’t happen overnight, but it’s already underway.

However, this won’t be Medtronic’s only growth opportunity. The company is still testing its robot-assisted surgery (RAS) device, the Hugo System. As Medtronic noted last year, robotic surgery represents less than 5 percent of all procedures that could be performed as such, so there’s a lot of runway in that area as well. Again, it could be several years before Hugo is licensed in the US, where it is currently being tested, although it is being used in some countries overseas.

So it will take some patience, but Medtronic’s financial results, which aren’t horrible now, should improve eventually. Of course, the healthcare giant remains a top dividend pick. It has now increased its payments for 47 consecutive years. It is getting closer and closer to the coveted status of Dividend King. Medtronic has a forward yield of 3.13% compared to S&P 500his average of 1.32%. The company is a reliable and consistent dividend payer to hold for a long time.