Medtronic plc (MDT): what the price requires
At today's price, Medtronic plc (MDT) is priced for +4.5% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MDT
Headline
| Field | Value |
|---|---|
| Ticker | MDT |
| Company | Medtronic plc |
| Current price | $83.72/sh |
| Composition | Cardiovascular Portfolio 38% / Neuroscience Portfolio 28% / Medical Surgical Portfolio 24% / Other operating segments net sales 9% / Other adjustments 0% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 9.4% |
| Operating margin today | 17.9% |
| Margin compression implied | -8.5pp |
| Implied growth | 4.5% |
| Multiple paid | 21x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.9pp.
Reconcile: at the x-ray's 9.3% required return this reads ~18.2%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.02σ |
| cohort percentile (of 112 peers) | 48 |
| implied end-window share | 0% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.03x | 5 | expensive |
| Earnings | 2.05x | 5 | expensive |
| Relative | 0.79x | 5 | justifies |
| Growth | 1.04x | 4 | expensive |
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)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $99.22 | 0.84x | yes | FCF base $5.8B, growth 8% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection |
| DCF Exit Multiple | Growth | $93.45 | 0.90x | yes | Exit EV/EBITDA: 9.6x / 11.6x / 13.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $106.56 | 0.79x | yes | P/E 24x (static sector reference · 2026-04), scenarios: 19.9x / 24.0x / 28.1x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $51.79 | 1.62x | yes | Stage 1: 4% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $40.25 | 2.08x | yes | BV/sh $38.36, ROE (TTM) 9.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $41.21 | 2.03x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $70.57 | 1.19x | yes | Rev $36.4B, growth 8% (input: historical growth; tapered), Terminal P/S: 2.5x / 3.0x / 3.5x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $44.76 | 1.87x | yes | EPS $3.73, growth 4% (input: historical EPS growth), PEG=5.63 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $36.08 | 2.32x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $6.31B × (1−31%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $41.38 | 2.02x | yes | BV $38.36 + 5yr PV of (ROE (TTM) 9.7% − Kₑ 9.3%) × BV; BV grows 6.3%/yr |
| Graham Number | Asset | $56.74 | 1.48x | yes | √(22.5 × EPS $3.73 × BVPS $38.36) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $116.15 | 0.72x | yes | EBITDA $9.43B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $44.69 | 1.87x | yes | FCF $5426.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $40.86 | 2.05x | yes | SBC-adj FCF $4.97B (FCF $5.43B − SBC $0.46B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $51.53 | 1.62x | yes | EPS $3.73 × (8.5 + 2×4.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $10.71 | 7.82x | yes | BV $38.36 × (ROIC 2.5% / WACC 9.1%) |
| P/Sales Sector | Relative | $112.80 | 0.74x | yes | Revenue $36.36B × sector P/S 4.0x |
| PEG Fair Value | Relative | $22.34 | 3.75x | yes | EPS $3.73 × (PEG 1.5 × growth 4.0% (input: historical EPS growth)) → PE 6.0x |
| Earnings Yield | Earnings | $40.32 | 2.08x | yes | EPS $3.73 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $17.0b |
| Net debt / NOPAT (after-tax) | 3.96x |
| Net debt / operating income (pre-tax) | 2.72x |
| Interest coverage | 8.7x |
| Share count CAGR (buyback) | -1.1% |
| Burning cash | no |
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)
- SYK (STRYKER CORP)
- (no filing in the citation store)
- BSX (BOSTON SCIENTIFIC CORP)
- (no filing in the citation store)
- ZBH (ZIMMER BIOMET HOLDINGS, INC.)
- (no filing in the citation store)
- BDX (BECTON DICKINSON & CO)
- (no filing in the citation store)
- SNN (Smith & Nephew plc)
- (no filing in the citation store)
- EW (EDWARDS LIFESCIENCES CORPORATION)
- (no filing in the citation store)
- ISRG (Intuitive Surgical, Inc.)
- (no filing in the citation store)
- BAX (BAXTER INTERNATIONAL INC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
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.