Strength in Cardiovascular Unit Likely to Lift MDT's Q3 Performance

Medtronic MDT is set to release third-quarter fiscal 2026 results on Feb. 17, before the market opens.

The company posted earnings per share (EPS) of $1.36 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 3.82%. Medtronic beat earnings estimates in each of the trailing four quarters, the average beat being 2.75%.

Q3 Estimates for MDT

The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $8.90 billion, which suggests 7.3% growth from the year-ago reported figure.

The Zacks Consensus Estimate for earnings is pinned at $1.33 per share, which implies a 4.3% decrease from the year-ago recorded actuals.

Estimate Revision Trend Ahead of MDT’s Q3 Earnings

Estimates for fiscal third-quarter earnings have dropped 1 cent to $1.33 per share in the past 60 days.

Let’s briefly review the company’s performance leading up to this announcement.

Factors Likely to Have Shaped MDT’s Q3 Performance

Cardiovascular

The segment is expected to have continued its accelerated growth streak, driven by the Cardiac Ablation Solutions (“CAS”) business. The pulsed field ablation (PFA) portfolio may have generated the majority of CAS revenues in the fiscal third quarter, supported by ongoing strength in the Affera mapping system and the Sphere-9 dual energy and high-density mapping catheter.

Across the rest of the Cardiovascular unit, Cardiac Rhythm Management may have performed strongly, banking on the Micra leadless pacemakers, the Aurora extravascular implantable cardioverter defibrillator (EV-ICD) system, SelectSure 3830 lead and TYRX. Strength in the Evolut FX+ TAVR system is likely to have driven Structural Heart’s performance. Peripheral Vascular is expected to have witnessed improved growth, supported by the Neuroguard IEP carotid stent and new product rollouts. All these factors are expected to have favored Medtronic’s top line in the fiscal third quarter.

The Zacks Consensus Estimate projects Cardiovascular revenues to increase 10.8% year over year.

Neuroscience

Within this segment, Medtronic’s spine AiBLE ecosystem, which comprises AI-enabled preoperative planning software and enabling capital equipment, including robotics, navigation, imaging and powered surgical instruments, is likely to have continued driving share gains and strong spine surgeon uptake. Robust U.S. and global growth in Core Spine, as well as Neurosurgery, may have also supported performance in Cranial & Spinal Technologies.

Medtronic PLC Price and EPS Surprise

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After a flat performance in the second quarter, Specialty Therapies’ performance is likely to have improved, with the company’s efforts to accelerate growth in Neurovascular and Pelvic Health. These are expected to have been supported by the lapping of the majority of China VBP  in January, along with contributions from the Neuroguard carotid stent and Altaviva launches. The continued rollout of the Inceptiv SCS and BrainSense aDBS systems is likely to have supported growth in Pain Stim and Brain Modulation in Neuromodulation.

Going by the Zacks Consensus Estimate, Neuroscience revenues are expected to grow 5.2% year over year.

Medical Surgical

Throughout fiscal 2026, the business has been impacted by stable market pressures from bariatric surgery and the continued shift to robotic surgery, both primarily in the United States. This is expected to have weighed on third-quarter sales as well. On a positive note, Medtronic secured FDA clearance for the Hugo robotic-assisted surgery (RAS) system for use in urologic surgical procedures. The U.S. introduction of the system builds on the company’s broad surgical offering, including the Touch Surgery ecosystem, which is helping deliver a connected, integrated operating room in more than 30 countries.

Medtronic may have also seen strong performance in the Endoscopy business, supported by growth in esophageal products and GI Genius, the AI-powered solution used to detect polyps during colonoscopies. All these trends and developments are expected to have favored the segment’s performance in the fiscal third quarter.

The Zacks Consensus Estimate for MedSurg’s revenues suggests a 3.7% year-over-year increase.

Diabetes

The business demonstrated particular strength in international markets but lower U.S. growth in the previous quarter, with customers anticipating the launch of new sensors to lead to a decline in new orders. With Medtronic accepting new orders, the pent-up demand is likely to have continued to materialize.

The Diabetes business continues to be in a strong innovation cycle. The MiniMed 780G system already received CE Mark for three expanded indications — including for type 2, for children as young as age two and during pregnancy — and also FDA approval for type 2 diabetes. During the quarter, the company made a broad U.S. commercial launch of the 780G system integrated with Abbott’s Instinct sensor. Medtronic received FDA approval to start the U.S. pivotal for Vivera, the third-generation algorithm, and also continued to advance the new AID systems, MiniMed Flex and MiniMed Fit.

In terms of the planned separation, Medtronic filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering (IPO) of newly issued common stock. The separation is expected to be completed through a series of capital markets transactions, with a preferred path of an IPO and subsequent split-off. The strategic change allows Medtronic to focus its portfolio on high-margin growth markets such as PFA and renal denervation.

The Zacks Consensus Estimate for Diabetes’ revenues indicates 11.5% year-over-year growth in the fiscal third quarter.

What Our Quantitative Model Predicts for MDT

Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates. This is not the case here, as you can see below:

Earnings ESP: Medtronic has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this time:

Veracyte VCYT has an Earnings ESP of +7.98% and a Zacks Rank #1. The company is set to release fourth-quarter 2025 results on Feb. 25. 

VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 45.12%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS is expected to increase 13.9% from the year-ago quarter figure.

Globus Medical GMED has an Earnings ESP of +3.92% and a Zacks Rank #2. The company is expected to release fourth-quarter 2025 results soon.

GMED’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 16.24%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS is expected to surge 26.2% from the year-ago reported figure.

Merit Medical Systems MMSI has an Earnings ESP of +2.09% and a Zacks Rank #2. The company is slated to release fourth-quarter 2025 results on Feb. 24.

MMSI’s earnings topped estimates in each of the trailing four quarters, the average surprise being 14.1%. The Zacks Consensus Estimate for the company’s fourth-quarter EPS is anticipated to increase 3.2% from the year-ago quarter’s figure.

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This article originally published on Zacks Investment Research (zacks.com).

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