Free Trial

Three Reasons Why Medtronic Stock can be a Recession Winner

Three Reasons Why Medtronic Stock can be a Recession Winner

Since pushing to an all-time high in September 2021, Medtronic (NYSE: MDT) has been falling in lock step with tech stocks. That pattern continued even after the company posted a double beat in its fiscal year 2023 first quarter. MDT stock feel 4% on the news. Later in the week the stock regained most of that loss, but it dropped in sync with the broader market on Friday, August 26. 

However, the volatile price action with MDT stock shows why context matters in investing. The company’s earnings report came at a time when investors were looking for any reason to push stocks lower. And it got that with the hawkish tone set by the Federal Reserve.  

That’s not to say it’s all smooth sailing for the medical device company. The company was expected to benefit from a “V-shaped” recovery coming out of the pandemic. Due to supply chain disruptions among other things, that hasn’t emerged.  

That’s showing up in the performance of the stock. Even though the company maintained its guidance, at least one analyst, Raymond James, downgraded the stock with the belief that Medtronic will take longer to recover from the supply chain disruptions. And the consensus of analysts surveyed by MarketBeat gives MDT stock a Hold with a price target of $112.10.  


With that in mind, I’ll admit that investors should maintain a realistic outlook for MDT stock in the short term, but there are reasons for investors with a long-term outlook to consider Medtronic as a stock to manage through this recession.  

Demand Will Remain Strong  

Despite the massive amount of healthcare information that health care professionals collect every day, approximately 66% of physicians say they don’t have all the information they need about their patients. 

And according to a Google/Harris poll, 96% of U.S. physicians say that easier access to critical information may help save lives. Furthermore, McKinsey reports that between $500 and $750 billion of healthcare spending could be reduced by better use of data.  

All of this works in favor of Medtronic. The company delivers data-enabled devices that improves treatment. That data can become evidence-based insights that clinical teams can put to deliver more predictive outcomes.  

An Expert in a Sector Where Expertise Matters 

The health care sector is complex. This creates a high cost of entry. And that cost isn’t only measured in dollars. Companies need the knowledge base to devise relevant and efficient healthcare technology solutions.  

That gives Medtronic a strong advantage. The company’s products and services cover virtually all areas of health care. This means that the company is already delivering the data that the medical community needs. 

And the company continues to develop new products. In fact, the company just announced that its investigational EV ICD System met safety endpoints in a global clinical trial. The system is a first-of-its-kind defibrillator in which the lead is placed under the breastbone and outside of the heart and veins.  

The Fundamentals Remain Strong 

Finally, Medtronic is still a fundamentally solid company. And at times like these, that should provide comfort to investors. One metric that is encouraging is the company’s free cash flow (FCF). After falling in 2021, FCF rebounded in 2022 and is above pre-pandemic levels.  

Furthermore, the company expects to use that cash to reward shareholders. As executive vice president and chief financial officer Karen Parkhill said on the company’s latest earnings call, “We continue to target returning a minimum of 50% of our free cash flow to our shareholders, primarily through our strong and growing dividend.” Parkhill also pointed to the company’s recent pattern of share repurchases which totaled $2.5 billion in Medtronic’s prior fiscal year.  

→ Gold Set to EXPLODE! (From Gold Safe Exchange) (Ad)

Should you invest $1,000 in Medtronic right now?

Before you consider Medtronic, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Medtronic wasn't on the list.

While Medtronic currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

5G Stocks: The Path Forward is Profitable Cover

Click the link below and we'll send you MarketBeat's guide to investing in 5G and which 5G stocks show the most promise.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Medtronic (MDT)
4.5182 of 5 stars
$85.76+0.7%3.22%27.31Hold$94.91
Compare These Stocks  Add These Stocks to My Watchlist 

Chris Markoch

About Chris Markoch

  • CTMarkoch@msn.com

Editor & Contributing Author

Retirement, Individual Investing

Experience

Chris Markoch has been an editor & contributing writer for MarketBeat since 2018.

Areas of Expertise

Value investing, retirement stocks, dividend stocks

Education

Bachelor of Arts, The University of Akron

Past Experience

InvestorPlace


Featured Articles and Offers

Home Depot: Earnings Mixed, Wait to Buy the Dip

Home Depot: Earnings Mixed, Wait to Buy the Dip

Home Depot had a mixed quarter, with top and bottom line results diverging from consensus.

Search Headlines: