Medtronic plc (MDT): what the price assumes

In the published model solve dated 2026-Q2, anchored at $91.58, Medtronic plc (MDT) is priced for +6.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-03.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/MDT

Headline

FieldValue
TickerMDT
CompanyMedtronic plc
Current price$91.58/sh
CompositionCardiovascular Portfolio 38% / Neuroscience Portfolio 28% / Medical Surgical Portfolio 24% / Other operating segments net sales 9% / Other adjustments 0%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)10.0%
Operating margin today17.8%
Margin compression (value-band)-7.8pp
Implied growth6.1%
Multiple paid22x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.5% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.14σ
cohort percentile (of 115 peers)48

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.21x5expensive
Earnings2.22x5expensive
Relative0.85x5justifies
Growth1.05x4expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=19)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$99.740.92xyesFCF base $5.8B, growth 8% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection
DCF Exit MultipleGrowth$100.040.92xyesExit EV/EBITDA: 10.5x / 12.5x / 14.5x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$107.350.85xyesP/E 24x (static sector reference · 2026-04), scenarios: 19.9x / 24.0x / 28.1x (bear / base = reference held flat / bull), EV/EBITDA 16x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$52.181.76xyesStage 1: 4% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$40.552.26xyesBV/sh $38.64, ROE (TTM) 9.7%, ke 9.3%
Two-Stage Excess ReturnAsset$41.512.21xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$77.201.19xyesRev $36.4B, growth 8% (input: historical growth; tapered), Terminal P/S: 2.7x / 3.2x / 3.8x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$44.762.05xyesEPS $3.73, growth 4% (input: historical EPS growth), PEG=6.12 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$36.292.52xyesNormalized EBIT (5y avg op income, one-time charges added back) $6.31B × (1−31%) / WACC 9.1% → EPV (no growth)
Residual IncomeAsset$41.682.20xyesBV $38.64 + 5yr PV of (ROE (TTM) 9.7% − Kₑ 9.3%) × BV; BV grows 6.3%/yr
Graham NumberAsset$56.951.61xyes√(22.5 × EPS $3.73 × BVPS $38.64) — Graham's conservative floor
EV/EBITDA RelativeRelative$117.010.78xyesEBITDA $9.43B × sector EV/EBITDA 16.0x
FCF YieldEarnings$45.022.03xyesFCF $5426.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$41.162.22xyesSBC-adj FCF $4.97B (FCF $5.43B − SBC $0.46B) capitalized at Kₑ
Ben Graham FormulaEarnings$51.531.78xyesEPS $3.73 × (8.5 + 2×4.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$10.788.50xyesBV $38.64 × (ROIC 2.5% / WACC 9.1%)
P/Sales SectorRelative$113.630.81xyesRevenue $36.36B × sector P/S 4.0x
PEG Fair ValueRelative$22.344.10xyesEPS $3.73 × (PEG 1.5 × growth 4.0% (input: historical EPS growth)) → PE 6.0x
Earnings YieldEarnings$40.322.27xyesEPS $3.73 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$17.0b
Net debt / NOPAT (after-tax)3.82x
Net debt / operating income (pre-tax)2.62x
Interest coverage9.0x
Share count CAGR (buyback)-1.1%
Burning cashno

Bullet Takeaways

Medtronic is one of the largest medical-device companies in the world, spread across Cardiovascular (about 38% of revenue), Neuroscience (28%), Medical-Surgical, and the diabetes business it just partly spun out through the MiniMed IPO. Fiscal 2026 delivered $36.4 billion in revenue, up 8.4% reported, its fastest annual growth in a decade.

The balance sheet underwrites a 48-year dividend-increase streak. The company carries net debt near $17 billion at about 2.6 times operating income with interest coverage around 9 times, and pays a $2.84 annual dividend yielding about 3.5%. That financial position is what lets it keep raising the payout through cycles.

At about $79 (as of June 27, 2026) the price reads within range. The growth-DCF and relative-multiple frames sit above the price while the asset and earnings-power models say expensive, and the inversion implies only about 3% operating-profit growth, a low bar for a business that just accelerated.

Bull Case

Lead with the balance sheet, because it is the foundation of everything else Medtronic does and the reason its dividend promise is credible. The company carries net debt near $17 billion against trailing operating income of about $6.5 billion, roughly 2.6 times, with interest coverage near 9 times and about $9.2 billion of liquid assets on hand. That is a conservative, investment-grade structure for a company this size, and it is what has funded 48 consecutive years of dividend increases, the streak that makes Medtronic a dividend aristocrat. A management team that has protected and grown the payout across half a century of medical-device cycles is signaling durable confidence in its own cash generation, and the current $2.84 annual dividend yields about 3.5% at the price.

The operating story finally matched the balance-sheet quality this year. Fiscal 2026 revenue reached $36.4 billion, up 8.4% reported and 5.8% organically, which management called the highest annual revenue growth in a decade. The fourth quarter was strong at $9.8 billion, up 9.9% reported and 6.6% organically. The diabetes business, even as Medtronic took it public through the MiniMed IPO, grew 15% reported on momentum in continuous glucose monitoring and new patient starts. The 10-K describes a diversified customer base of "healthcare systems, clinics, third-party healthcare providers, distributors, and other institutions, including governmental healthcare programs," which spreads demand across payers and geographies and dampens the impact of any single market.

The valuation leaves room if the acceleration holds. The price of about $79 sits below the growth-DCF ($99 perpetual, $90 exit-multiple) and the relative-multiple frames (relative valuation $107, EV/EBITDA relative $116, P/Sales $113), and the inversion implies only about 3.1% operating-profit growth. For a company guiding fiscal 2027 to organic revenue growth of 6.75% to 7.25% and non-GAAP EPS of $5.90 to $6.00 (6.7% to 8.5% growth), a price that demands only 3% is a modest hurdle. The bull case is a re-accelerating, well-financed aristocrat trading below where its own forward methods and several analyst targets (a $98 to $99 average) put it.

Bear Case

The structural truth a Medtronic holder would rather not face is that for most of the last decade this was a low-single-digit grower, and the multiple is now pricing in the assumption that the recent acceleration is permanent. Fiscal 2026 was the best growth year in ten years precisely because the prior nine were slow. One strong year does not reset the base rate for a $36 billion device company whose largest segments, cardiovascular and neuroscience, compete in mature categories against Stryker, Boston Scientific, and Abbott. If organic growth settles back toward the 4% to 5% it averaged before this year rather than the 6.75% to 7.25% guided for fiscal 2027, the relative-multiple frames that currently reach the price would no longer justify it.

The static frames already say the price is rich. Earnings power value lands near $36, the FCF-yield frame near $45, simple excess return near $40, and the Peter Lynch frame near $45, all far below the roughly $79 price, with a blended X-ray near $52. Only the growth-DCF and peer-multiple methods reach the tape, and they do so by extrapolating the better growth forward. The two-stage dividend model lands near $52, which matters for a stock owned substantially for its yield: it says the dividend stream alone, discounted, supports a value well below the current price, so the buyer is paying up for capital appreciation on top of the income.

The near-term pressures are concrete. Management guided to roughly $250 million of tariff impact in fiscal 2027, including $75 million in the first quarter, and a gross-margin decline of about 20 basis points year over year. The MiniMed separation removes a faster-growing diabetes contribution from the consolidated story going forward. And the analyst tape has been drifting down, not up: targets were trimmed across several firms, with Truist cutting to $86 and Bernstein to $97 from higher levels. The bear conclusion is that a re-rating requires the new growth rate to prove durable through tariffs, a slimmer portfolio, and tough competition, and at a price already above the conservative frames, there is little margin if it does not.

Valuation

Medtronic reads as within range, with the price justified by the growth-DCF and relative-multiple frames while the asset and earnings-power models call it expensive. The split is clear: the perpetual-growth DCF lands near $99, the exit-multiple DCF near $90, relative valuation near $107, EV/EBITDA relative near $116, and P/Sales near $113, all above the roughly $79 price, while earnings power value ($36), simple excess return ($40), the FCF-yield frame ($45), and the Peter Lynch frame ($45) sit well below it. The blended X-ray is near $52. The inversion solves on operating income with an implied company-wide operating-profit growth around 3.1%, which is below the fiscal 2027 organic-revenue guide and well below the fiscal 2026 reported growth.

That is the more constructive read: on the inversion the price embeds only modest growth, leaving upside if the recent acceleration sustains. The sensitivity is high at about 7.8 points of implied growth per point of cost of capital, so the valuation is rate-sensitive for a leveraged, yield-oriented name. The reliability of the solve is rated ok.

The honest synthesis is that Medtronic is not cheap on the conservative asset and earnings-power frames but is reasonable to inexpensive on the inversion and the forward methods. The whole question is durability of growth. If organic growth holds near the guided high-6% to low-7%, the peer-multiple and growth frames are the right guide and the stock has room. If it reverts toward the slower historical base, the earnings-power frames are the more honest anchor and the price is full. The dividend, supported by the two-stage DDM well below the price, is the floor that pays the buyer to wait for that question to resolve.

Catalysts

Fiscal 2026 results (reported June 3) were the headline catalyst: Q4 revenue of $9.8 billion, up 9.9% reported and 6.6% organically, capped a full year of $36.4 billion in revenue, up 8.4% reported and 5.8% organically, which Medtronic called its highest annual revenue growth in a decade. The diabetes business grew 15% reported on continuous-glucose-monitoring momentum.

The structural event was the MiniMed IPO, which took the diabetes business public during the quarter. Going forward, the consolidated growth story loses a faster-growing contributor, and the separation is a swing factor for how the remaining portfolio is valued.

Fiscal 2027 guidance is for organic revenue growth of 6.75% to 7.25% and non-GAAP diluted EPS of $5.90 to $6.00 (6.7% to 8.5% growth), but it embeds roughly $250 million of tariff impact (including $75 million in Q1) and an expected gross-margin decline of about 20 basis points.

Capital return is the steady draw: a $2.84 annual dividend ($0.71 quarterly) yielding about 3.5%, backed by 48 straight years of increases. Analyst sentiment is mixed and drifting lower, with an average target near $98 to $99 but recent trims (Truist to $86, Bernstein to $97). The watch items are organic growth durability, tariff and margin trends, new-product cadence in cardiovascular and neuroscience, and the post-MiniMed portfolio shape.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive MDT report on boothcheck