Why Is Medtronic Stock Trading Higher After Analyst Upgrade

Core Viewpoint - William Blair upgraded Medtronic Plc from Market Perform to Outperform, citing new product launches and a more favorable business outlook for achieving high-single-digit EPS growth [1][2]. Group 1: Product Launches and Growth Potential - Medtronic is ramping up several new products, with many more in the pipeline, which could lead to significant growth [1]. - The company is positioned for high-single-digit EPS growth, potentially delivering low-double-digit equity returns when factoring in a 2.9% dividend yield [2]. - The Hugo system has received FDA approval for urologic surgical procedures, marking a significant milestone after nearly a decade of anticipation [3]. Group 2: Financial Valuation and Market Position - Medtronic's stock is trading at approximately 16 times calendar 2026 EPS, which is in line with or slightly below large-cap medtech peers, indicating a favorable risk/reward scenario [3]. - The surgical segment, which accounted for 19% of revenues in 2025, has been growing slower than the corporate average, but recent developments may signal an inflection point [4]. Group 3: Competitive Landscape and Strategic Focus - The Pulsed Field Ablation (PFA) platform is one of Medtronic's fastest-growing businesses, providing a counterbalance to slower growth in legacy pacing and defibrillation markets [6]. - The diabetes spin-off is seen as beneficial for both Medtronic and the newly formed MiniMed, allowing Medtronic to focus on growth drivers [7].