Key Points
Medtronic’s stock has slumped over the past five years.
But its restructuring efforts could bring back the bulls.
Shares of Medtronic (NYSE: MDT), one of the world's largest medical device makers, have declined by more than 30% over the past five years. Higher costs, supply chain bottlenecks, quality control issues, and competitive pressure in surgical robotics all weighed on its stock.
Yet Wall Street remains bullish on Medtronic, with an average price target of $98.44 and a top target of $121. I believe it could rise more than 40% from its current price of $86 and hit that high-end target by the end of this year for a few simple reasons.
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Why will Medtronic's stock rally?
Back in March, Medtronic spun off its diabetes unit as MiniMed (NASDAQ: MMED) to streamline its business. It's also restructuring its business to expand its higher-margin cardiovascular and neuroscience portfolios and to integrate more AI features into its surgical planning products.
In fiscal 2026 (which ended in April), Medtronic's revenue grew 8.4% to $36.4 billion (or 5.8% organically) and marked its strongest top-line growth in ten years. From fiscal 2026 to fiscal 2029, analysts expect its revenue and EPS to grow at CAGRs of 5% and 13%, respectively.
Even if Medtronic's stock rises to $121 per share, it would only trade at 18 times next year's earnings. It pays an attractive forward yield of 3.3%, and it will become a Dividend King next year if it raises its payout for the 50th consecutive year. That's why I believe this medical device maker will attract a lot more attention over the next few months.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Medtronic. The Motley Fool has a disclosure policy.