This Medtech Giant's Stock Is Soaring. Should You Buy It Ahead of 2026?

It's been a good year for Medtronic (NYSE: MDT), a medical device specialist. Despite the threat of tariffs, the healthcare leader has generally delivered strong financial results and has outperformed broader equities. Naturally, expectations were high going into the company's most recent quarterly update. Medtronic did not disappoint, and its share price once again jumped as a result.

Is it too late to invest in the stock now that it's gained 23% this year? Let's find out whether Medtronic's shares are a buy heading into 2026.

Medtronic delivers another beat and raise

During the second quarter of its fiscal year 2026, ending on Oct. 24, Medtronic reported sales of $9 billion, up 6.6% year over year. The company's adjusted earnings per share (EPS) jumped 8% year over year to $1.36. While that may seem unimpressive on the surface, it's a strong performance for a medical device giant, one which even came in ahead of analyst estimates. Medtronic's revenue was also on the higher end of its projections, while its EPS beat its own guidance.

Image source: Getty Images.

One of the biggest drivers behind Medtronic's strong quarter was its cardiovascular segment. During the period, cardiovascular revenue grew 10.8% year over year to $3.4 billion, outpacing sales growth of even Medtronic's much smaller diabetes care unit. The healthcare company said that, outside of the pandemic (during which some dynamics boosted cardiovascular revenue), this segment grew at its fastest rate in over a decade.

Medtronic has its pulsed-field ablation (PFA) portfolio to thank for that. PFA is a relatively new technology in which electrical pulses are used to perform ablation -- removal of abnormal tissue to treat a particular condition -- as opposed to using other methods that rely on heat or cold, which can cause damage to nearby tissue. In late 2023, Medtronic earned clearance from the U.S. Food and Drug Administration for PulseSelect, a PFA system designed to treat atrial fibrillation, a type of irregular heart rhythm.

PulseSelect became the first PFA system to be approved by the FDA, and Medtronic is now clearly reaping the benefits of this breakthrough, which is helping drive stronger sales growth within its largest business segment. It highlights another key point about Medtronic: The company has long been a leader in innovation. It routinely launches new products and boasts a vast portfolio of hundreds of devices that help it generate consistent revenue, earnings, and free cash flow. That's an attractive quality in any business.

The strong results during its latest period were just part of Medtronic's story. The company also announced raised guidance for its fiscal year 2026. It now expects organic revenue growth of about 5.5% for the year, up from its previous projection of 5%, while also slightly boosting its adjusted EPS guidance. This announcement follows the company's last quarterly report, in which it also raised EPS guidance.

There are more catalysts ahead

Medtronic is expecting significant new launches that could further propel the company's growth. Among them is the Hugo system, a robotic-assisted surgery (RAS) device. Medtronic completed clinical trials in the U.S. for the Hugo system in urologic procedures and requested clearance from the FDA. That could mark the company's grand entrance in the American RAS market.

True, it will be battling with the undisputed market leader, Intuitive Surgical. However, one reason Medtronic decided to pursue this opportunity is that it saw a huge untapped market. As it has stated, fewer than 5% of procedures that could be performed robotically are currently being done so, despite the significant advantages conferred by their minimally invasive nature. There's room for multiple winners in this market over the long run. Medtronic's Hugo system is expected to help boost sales once it's approved, particularly as it earns additional label expansions over time.

Don't forget about the dividend

Medtronic is generating strong sales and profits. The company could also mitigate the impact of tariffs, notably by eliminating its diabetes care unit, which has lower operating margins than the rest of the business. And it will benefit from new growth opportunities, such as the RAS market.

Finally, this is an excellent dividend stock. The company has raised its payouts for 48 consecutive years, and is close to achieving Dividend King status, a designation reserved for corporations that have increased their dividend for at least 50 years straight. Medtronic is an outstanding stock to buy for long-term income seekers heading into 2026.

Prosper Junior Bakiny has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.