UBS upgraded Medtronic to Buy, citing a turnaround underway. The company just reported its highest annual revenue growth in a decade, with cardiac ablation surging 78% globally. But tariffs, competition, and concentration risk remain headwinds.
UBS upgraded Medtronic (NYSE:MDT) to Buy from Neutral today, telling investors a "turnaround" is underway. The upgrade raises a clear question: Is the medical device giant finally returning to sustainable growth after years of underperformance, or is it too early to call the turnaround complete?
Medtronic just reported its highest annual revenue growth in a decade. Fiscal Q4 revenue hit $9.8 billion, up 9.9% as reported and 6.6% organic. Full-year revenue reached $36.4 billion, up 8.4% as reported and 5.8% organic. The company is building momentum in high-growth opportunities including Affera, Symplicity, Hugo, Altaviva, and Stealth AXiS.
The cardiac segment is emerging as a key growth driver. Cardiac Ablation Solutions revenue rose 78% globally, including 124% U.S. growth. Newer product launches are contributing meaningfully, strengthening Medtronic's competitive position in high-growth markets. The company is investing heavily in innovation and M&A, including targeted investments in ICE catheter technology.
Another positive sign: Medtronic's high-growth platforms are gaining traction. Symplicity Spyral for hypertension is now annualizing at $100 million. Broader MedTech sector sentiment may also be improving. BTIG noted in its Q2 preview that MedTech appears to be stabilizing after a period of underperformance, consistent with market breadth expansion and momentum rotating away from Semis/AI.
Investors may want several more quarters of consistent execution before concluding the turnaround is complete. Management has spent years trying to accelerate growth, and the recent momentum needs to prove sustainable across multiple quarters.
Much of the momentum is concentrated in a handful of high-growth product categories. That raises the question of whether growth can become more broad-based across the portfolio. Competition remains intense in cardiovascular devices and robotic surgery, especially from Intuitive Surgical and Boston Scientific.
Tariffs are another factor to monitor. Management said tariffs affected the business by $74 million, an 80 basis point headwind. Fiscal 2027 guidance embeds an impact of around $250 million with no assumed refunds.
Structural Heart remains an area to watch. Management described the U.S. market as "softer" during the quarter, partly attributing weakness to low-risk data trends. Medtronic is also uncertain about the MiniMed separation timing and guided conservatively by including a full year of diabetes in FY 2027. If the separation happens before year-end, there could be upside to guidance.
Medtronic expects fiscal 2027 organic revenue growth of 6.75% to 7.25%, including approximately 11.5% to 12% organic growth in Q1. Whether the turnaround story gains broader investor acceptance will depend on sustaining growth across high-growth businesses while delivering consistent execution throughout fiscal 2027.
For more on Medtronic specifically, see the MDT stock page. For broader context on medical device sector trends, see our stock market analysis.
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