Medtronic is a Dividend Aristocrat That Keeps Gaining

Key Points

• Medtronic is a leading medical device maker known for inventing the world's first portable and implantable pacemaker.
• Medtronic is a Dividend Aristocrat that's consistently raised its dividend payments for 46 consecutive years.
• Medtronic beat its fiscal Q3 2024 EPS by 15 cents, grew revenues by 4.7% YoY and raised its fiscal full-year 2024 guidance along with adding $5 billion to its stock buyback program.

Medical device maker Medtronic PLC NYSE: MDT is a Dividend Aristocrat in the medical and healthcare sectors. The medical device maker has raised its dividend payout for 46 consecutive years through bull and bear markets. Medtronic's products cover many treatments and specialties, including diabetes management, neuromodulation, deep brain stimulation devices for chronic pain management, patient monitoring and diagnostics. Its pacemakers, catheters, and defibrillators, along with stents and valve repair and replacement devices, are the main drivers for its largest segment, cardiovascular. The aging population provides an ongoing tailwind that's enabled the company to keep growing. 

Cardiovascular Devices are its Leading Revenue Driver

Its cardiovascular products generate the lion's share of Medtronic's sales, generating over 36% of total revenues. It's provided a stable revenue stream, and the whole cardiovascular device industry is expected to generate a compound annual growth rate (CAGR) of nearly 8% YoY through 2032. Its top competitor is Abbott Laboratories Inc. NYSE: ABT, which became a major player when it acquired St. Johns Medical and its portfolio of pacemakers and stents. Medtronic's Cardiovascular Portfolio includes Structural Heart and Aortic (SHA), Coronary and Peripheral Vascular (CPV and Cardiac Rhythm and Heart Failure (CRHF) divisions.

Inventing the First Portable Pacemaker

Medtronic may best be known for its wearable pacemakers. In 1957, an electrical engineer at the University of Minnesota Department of Surgery, Earl Bakken, invented the first battery-powered and portable pacemaker in collaboration with Dr. C. Walton Lillehei, who discovered that the heart's electrical system could be prompted to perform correctly with the help of electrical pulses sent through electrodes directly connected to cardiac tissue.

In 1958, the wearable pacemaker was used in local hospitals to great success and acceptance, prompting a surge of demand for the device to aid nonsurgical cardiac patients. Collaborating with his brother-in-law Palmer Hermundslide, they formed Medtronic, which introduced implantable pacemakers in 1960. Through the years, Medtronic continued to evolve and grow its portfolio of cardiovascular products and devices to become one of the world's leading medical device makers.

Steady earnings beats  

Medtronic reported fiscal Q3 2024 non-GAAP diluted EPS of $1.41, beating $1.26 consensus estimates by 15 cents. Revenues grew 4.7% YoY to $8.1 billion versus $7.95 billion consensus estimates. Its organic revenue results underscore the continued momentum driven by robust growth in Core Spine, Diabetes, Cardiac Surgery, Cardiac Pacing and Structural Heart divisions. Diabetes revenue rose 12.3% YoY to $640 million.

Growth by Portfolio Segments

Its Cardiovascular Portfolio grew revenues by 6.1% YoY to $2.929 billion. This includes a low double-digit organic increase in SHA, a mid-single-digit increase in CPV, and a low-single-digit increase in CRHF.

Its Neuroscience Portfolio grew revenues by 4.8% YoY to $2.355 billion. The Medical Surgical Portfolio, which includes Patient Monitor and Respiratory Intervention (PMRI) and Surgical and Endoscopy (SE), saw a 3.9% YoY revenue growth to $2.148 billion.

Exiting the Ventilator Business

Medtronic will be exiting the ventilator product line while combining the remaining PMRI business into a single unit called Acute Card and Monitoring (ACM). The ventilator product line has been increasingly unprofitable. The company will continue to honor existing ventilator contracts.

Raising Forward Guidance

Medtronic provided upside guidance for full year 2024 EPS of $5.19 to $5.21, up from $5.13 to $5.19 previous forecast, versus $5.16 consensus analyst estimates. Full-year 2024 revenues are expected to grow 4.75% to 5%, up from 4.75% or $32.71 billion to $32 billion versus $32.07 billion consensus estimates.

Medtronic CEO Geoff Martha commented, "Our recent major product approvals – including transformative products in the diabetes, cardiac rhythm management, neuromodulation, hypertension, and pulsed field ablation spaces – increase our confidence in driving reliable growth over the coming quarters and years."

Medtronic analyst ratings and price targets are at MarketBeat. Medtronic peers and competitor stocks can be found with the MarketBeat stock screener.

Daily Cup Pattern

The daily candlestick chart for MDT illustrates a cup pattern that completed its lip line retest near $89.03 on January 12, 2024. The cup lip line commenced at $89.03 on July 26, 2023, sinking to a $ 68.27 swing low on October 30, 2023. MDT formed a rounding bottom as shares ground up to retest the $89.03 cup lip line on January 31, 2024. Shares have pulled back to $82.65 before triggering a market structure low (MSL) at $85.01. MDT may be forming a handle as it sets up for a potential cup and handle breakout. The daily relative strength index (RSI) is chopping just above the 50-band. Pullback support levels are at $81.24, $77.60, $75.01 and $73.01.