Can Medtronic Outpace the Market in 2026?

Medtronic (MDT), the global medtech leader, has long been a bellwether for innovation and operational discipline in the healthcare sector. As 2026 approaches, the question of whether the company can outpace broader market trends hinges on three pillars: revenue growth, strategic transformation, and product innovation. With a stock currently trading at a discount to its estimated fair value and a robust pipeline of high-margin technologies, Medtronic appears poised to deliver compelling returns-if it can navigate near-term risks.

Revenue Growth: A Foundation of Stability and Momentum

Medtronic's financial performance in fiscal years 2024 and 2025 underscores its resilience. In FY24, the company reported $32.4 billion in worldwide revenue, with 3.6% reported growth and 5.2% organic growth, driven by broad-based gains across all four segments. This momentum continued into FY25, with revenue rising to $33.5 billion-a 3.6% reported increase and 4.9% organic growth. Notably, operating margins expanded by 190 basis points to 17.8% in FY25, while non-GAAP operating margins hit 25.7%.

The company's cash flow generation further strengthens its growth narrative. Free cash flow surged 14% to $5.2 billion in FY24, and Medtronic returned $5.5 billion to shareholders, including $1.6 billion in net share repurchases in Q4 alone. Analysts project earnings could reach $6.3 billion by September 2028, fueled by mid-single-digit revenue growth and margin expansion. These metrics suggest a business that is not only stable but actively accelerating.

Strategic Transformation: Refocusing for High-Margin Growth

Medtronic's strategic overhaul in 2025–2026 is centered on innovation, operational efficiency, and geographic diversification. A key milestone is the development of the Hugo surgical robot platform, which the company aims to submit to the FDA for urology indications in early 2025. This move signals a strategic pivot into the high-growth soft tissue surgical robotics market, where Medtronic now competes directly with incumbents like Intuitive Surgical.

The separation of its Diabetes business and restructuring efforts are also expected to enhance gross and operating margins by approximately 50 and 100 basis points, respectively. Meanwhile, Medtronic is expanding into emerging markets, particularly China, where cost-effective surgical products are driving double-digit growth. The company's global rollout of AI and IoT-enabled solutions, such as the Simplera Sync™ sensor, further positions it to capitalize on the digitalization of healthcare.

Product Innovation: PFA and Robotics as Growth Catalysts

Medtronic's product pipeline is arguably its most compelling asset. In cardiology, pulsed field ablation (PFA) has emerged as a game-changer. The company's PulseSelect system, which received FDA approval, is already outpacing cryoablation in adoption, with Cardiovascular portfolio revenue rising nearly 50% in Q1 FY26. The Affera mapping system and Sphere-9 catheter are redefining cardiac ablation procedures, offering improved outcomes and faster recovery times.

Beyond cardiology, Medtronic is leveraging AI and robotics to transform surgical care. The SpineABLE ecosystem integrates AI-driven preoperative planning with robotic-assisted surgery (RAS) and navigation tools, enhancing precision in spinal procedures. Additionally, the LigaSure™ RAS vessel-sealing technology received a CE Mark for use on the Hugo robotic platform, expanding its surgical robotics footprint. These innovations, coupled with strategic acquisitions like Fortimedix and Nanovis, are fortifying Medtronic's competitive edge in single-port surgery and spinal implants.

Valuation and Market Projections: A Compelling Case for Undervaluation

Despite its strong fundamentals, Medtronic's stock remains undervalued. As of late 2025, the stock traded between $97.47 and $99.75, while fair value estimates hover around $111-a discount of 10.2% to 12.2%. Analysts project FY2026 adjusted EPS in the range of $5.50 to $5.60, with revenue expected to reach $45.2 billion. Given Medtronic's expanding margins and focus on high-margin businesses, this valuation appears to understate its long-term potential.

However, risks persist. Margin pressures from pricing dynamics or delayed adoption of PFA and robotic systems could temper growth. Yet, with $2.8 billion invested in R&D in FY24, Medtronic is well-positioned to mitigate these challenges through continuous innovation.

Conclusion: A Medtech Giant Poised for Outperformance

Medtronic's combination of steady revenue growth, strategic reinvention, and breakthrough product innovation creates a compelling case for outpacing the market in 2026. The company's focus on high-margin technologies like PFA and surgical robotics, coupled with its undervalued stock, positions it as a standout in the medtech sector. While risks remain, Medtronic's disciplined execution and R&D-driven pipeline suggest it is well-equipped to deliver robust returns to shareholders. For investors seeking a high-margin, undervalued play in healthcare, Medtronic's 2026 prospects are hard to ignore.