Most of the market is somewhere between distracted and manic right now. AI names, macro rotations, rate speculation. Fine. But while that’s all happening, a $36 billion medical device company just posted its strongest organic growth in a decade, raised its dividend for the 49th consecutive year, and trades at roughly half the multiple of its closest peers. Nobody’s really talking about it.

That stock is Medtronic ($MDT). And the case here isn’t complicated.

Start with the FY2026 results, reported June 3, 2026. Full-year revenue came in at $36.364 billion, up 8.4% as reported and 5.8% organically – the highest annual organic growth rate the company has seen in 10 years. Q4 alone produced $9.807 billion, growing 9.9% reported and 6.6% organic, clearing guidance by 90 basis points. Non-GAAP diluted EPS for the year landed at $5.53. Free cash flow hit $5.426 billion, up 4.6%, with 76% conversion from non-GAAP net earnings.

Numbers like that tend to get rewarded. MDT’s stock moved a few percent and then went quiet. That gap between results and reaction is what’s worth paying attention to here.

The segment doing the heavy lifting is Cardiovascular. Q4 Cardiovascular revenue grew 10.1% organically. Cardiac Ablation Solutions – built around Medtronic’s pulsed field ablation portfolio – posted 78% global growth in the quarter. U.S. growth alone came in at 124%, with an 8-point share gain in a single quarter. Micra transcatheter pacing systems, which already hold roughly 47% revenue share in the global leadless pacemaker market, continued growing mid-teens through Q4. The OmniaSecure defibrillation lead launched in the U.S. and is gaining early traction. This isn’t a business coasting – the product cycle is genuinely active.

The Part That Gets Skipped

There’s a structural argument here that goes beyond the quarterly numbers. Medical devices, specifically the kind Medtronic sells, are not discretionary purchases. A cardiologist scheduling a pacemaker implant is not checking the 10-year yield first. A hospital’s electrophysiology lab doesn’t defer ablation procedures because the consumer confidence index dropped. The demand is driven by patient need, physician protocol, and hospital procedure volume – none of which are particularly sensitive to whether the Fed pauses or hikes.

Slight tangent, but relevant: the demographic tailwind here is real and long-duration. Global population over 65 is growing faster than any other age cohort, and cardiovascular disease remains the leading cause of death worldwide. Medtronic’s core markets are not shrinking. They’re expanding slowly, steadily, and predictably – the kind of growth that doesn’t show up in screeners but compounds meaningfully over time.

The company operates across four main verticals: Cardiovascular, Neuroscience, Medical Surgical, and Diabetes. Medical Surgical posted 5.1% Q4 growth, with Acute Care and Monitoring up low double-digits. Each segment is generating cash. No single regulatory or reimbursement change can destabilize the whole business at once. That kind of structural insulation is worth something – it just rarely gets priced in during environments where everyone is chasing faster-moving names.

One development that doesn’t seem fully absorbed yet: Medtronic announced plans to separate its Diabetes business into a standalone public company, with an IPO as the preferred path. Once completed, the remaining Medtronic becomes a leaner, higher-margin cardiovascular and neuroscience business. The Diabetes segment has historically weighed on overall margins. Removing it sharpens the remaining portfolio and should be accretive to gross margin, operating margin, and EPS. The market hasn’t done much with that yet.

Valuation

MDT is trading in the high-$70s. The forward P/E based on consensus estimates sits around 12.2x. The trailing P/E is approximately 20.6x – well below its own 3-year average of 27.2x and 5-year average of 28.8x. The broader medical devices and instruments industry trades at a peer average near 34x. MDT is at roughly 21x. For a business of this scale generating $36 billion in revenue, growing organically at the fastest rate in a decade, with FY2027 organic growth guidance raised to 6.75% to 7.25%, that discount is hard to rationalize purely on fundamentals.

The dividend situation: 49 consecutive years of increases. Quarterly payout now at $0.72 per share, or $2.88 annualized, yielding approximately 3.3% at current prices. Free cash flow of $5.4 billion annually covers that with room to spare. Across 30 analyst ratings, the consensus price target is approximately $105.76 – more than 40% above where the stock is today. Zero sell ratings.

That’s not a small gap. When a stock sits 40%+ below consensus target with no sell ratings, and the fundamental backdrop just improved, something else is going on. In this case it’s mostly sector-wide multiple compression in medtech and a market that’s been rotating toward higher-beta growth names for most of the year. That compression creates the opportunity. It also means there’s no clear catalyst timing – which is why this is a thesis that requires patience, not a short-term momentum call.

Price Levels Worth Watching

After compressing from the $110-120 range over a multi-year period, MDT has been consolidating in the mid-$70s to low-$80s. The $80 area has acted as near-term resistance. Support has held near $72-73 on recent pullbacks. Volume on down days has been light, which suggests the selling is more about positioning and rotation than any fundamental re-assessment of the business.

The 200-day moving average is overhead and acting as a ceiling. A sustained move above $80 with conviction and volume would change the character of the move materially. Until that happens, the stock is essentially a dividend-paying wait. That’s not exciting. But it’s also not a bad place to collect 3.3% while the valuation gap closes – or while you wait to see whether the Diabetes separation acts as the catalyst that reframes the multiple.

Three Scenarios

• Bull Case: FY2027 organic growth reaches the high end of guidance at 7.25%. Cardiac Ablation Solutions sustains triple-digit U.S. growth for another quarter or two, forcing analyst revisions higher. The Diabetes IPO is executed cleanly, margin expansion becomes visible in reported results, and the multiple begins to close the gap with peers. Stock moves toward the $95-105 range as analyst target convergence builds momentum.
• Base Case: Mid-single-digit organic growth continues. Cardiovascular maintains its leadership position in pacing and ablation. FY2027 guidance is met within range. The stock grinds higher toward $85-90 as the valuation discount narrows modestly over 12 months. Dividend yield continues to provide total return support at current levels.
• Bear Case: Hospital capital spending tightens due to macro pressure, delaying elective device procedures. Currency headwinds – which already clipped FY26 non-GAAP EPS by $0.15 – deepen. Tariff-related manufacturing costs continue; MDT flagged a 50 basis point operating margin hit from tariffs in FY26. The Diabetes IPO process drags or prices poorly. Stock revisits the $68-72 zone and the thesis requires reassessment.

What’s interesting is how few names check this many boxes at this kind of discount right now. Best annual organic growth in 10 years. Non-discretionary demand base. 49 years of consecutive dividend growth. Forward multiple near 12x in a sector that trades at 34x. Zero sell ratings with 40%+ upside to consensus target. Accelerating product cycle in cardiovascular. A catalyst – the Diabetes separation – that the market hasn’t priced in yet.

The market will eventually pay attention. It usually does. The question is whether you’re positioned before that happens or after.

For informational and educational purposes only. Not investment advice. Trading involves risk, including loss of principal.