MDT Stock Up on Q3 Earnings and Revenue Beat, Margins Down

Medtronic plc MDT reported third-quarter fiscal 2026 adjusted earnings per share (EPS) of $1.36, which fell 2.2% from the year-ago quarter’s figure. The figure beat the Zacks Consensus Estimate by 2.07%.

Without certain one-time adjustments — including amortization of intangible assets, restructuring and acquisition-related costs — GAAP EPS was 89 cents compared with $1.01 in the year-ago period. 

MDT’s Q3 Revenues

Worldwide revenues in the reported quarter totaled $9.02 billion, up 8.7% year over year on a reported basis and 6% organically. The top line surpassed the Zacks Consensus Estimate by 1.35%.

Following the announcement today, MDT shares rose 2.9% in premarket trading.

Segmental Analysis of MDT’s Q3 Revenues

The company reports revenues under four major segments — Cardiovascular, Medical Surgical, Neuroscience and Diabetes.

In the fiscal third quarter, Cardiovascular revenues increased 10.6% organically to $3.46 billion.

Medtronic PLC Price, Consensus and EPS Surprise

Medtronic PLC price-consensus-eps-surprise-chart | Medtronic PLC Quote

Within this, Cardiac Rhythm & Heart Failure sales totaled $1.86 billion, up 17% year over year organically. Revenues from Structural Heart & Aortic rose 2.6% organically to $929 million. Coronary & Peripheral Vascular revenues grew 5.9% organically to $672 million.

In the Medical Surgical portfolio, worldwide sales totaled $2.17 billion, up 2.7% year over year organically. While Surgical & Endoscopy revenues edged up 1.4% organically to $1.65 billion, Acute Care & Monitoring revenues jumped 7% to $519 million.

In Neuroscience, worldwide revenues of $2.56 billion were up 2.5% year over year organically. Cranial & Spinal Technologies sales amounted to $1.31 billion, up 3.7% year over year organically. Specialty Therapies revenues totaled $746 million, down 0.2% year over year organically. Neuromodulation revenues grew 3.6% organically to $503 million.

Revenues in the Diabetes group rose 8.3% organically to $796 million.

MDT’s Q3 Margin Performance

The gross margin in the reported quarter contracted 265 basis points (bps) to 63.8% due to a 17.3% rise in the cost of products sold (excluding amortization of intangible assets).

Research and development expenses rose 7% year over year to $722 million. Selling, general and administrative expenses jumped 8.8% to $2.96 billion.

The adjusted operating margin fell 253 bps year over year to 23%.

Medtronic’s Fiscal 2026 Outlook

For fiscal 2026, Medtronic continues to project organic revenue growth of 5.5%. The Zacks Consensus Estimate for fiscal 2026 worldwide revenues is pegged at $36.04 billion.

Full-year adjusted EPS is expected in the range of $5.62-$5.66, which also remains unchanged. The Zacks Consensus Estimate for the year’s adjusted earnings is pegged at $5.64.

Our Take on MDT Stock

Medtronic exited the third quarter of fiscal 2026 with earnings and revenues beating estimates.  Performance demonstrated the strength of the portfolio, with organic revenue growth coming ahead of the company’s guidance. Each of the businesses across the Cardiovascular portfolio increased organically. Diabetes, too, gained from performance in the international markets.

During the quarter, Medtronic secured CE Mark for Sphere-360 and FDA clearance for Hugo robotic-assisted surgery. The company also executed its M&A strategy with two key transactions, CathWorks in Coronary and Renal Denervation and Anteris in Structural Heart.

The contraction of both margins is discouraging.

MDT’s Zacks Rank & Key Picks

Medtronic currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Cardinal Health CAH and Align Technology ALGN.

Intuitive Surgical, currently sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2025 adjusted EPS of $2.53, which surpassed the Zacks Consensus Estimate by 12.4%. Revenues of $2.87 billion beat the Zacks Consensus Estimate by 4.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

ISRG has an estimated long-term earnings growth rate of 15.7% compared with the industry’s 12.7% growth. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 13.24%.

Cardinal Health,carrying a Zacks Rank #2 (Buy) at present, posted a second-quarter fiscal 2026 adjusted EPS of $2.63, exceeding the Zacks Consensus Estimate by 10%. Revenues of $65.6 billion topped the Zacks Consensus Estimate by 0.9%.

CAH has a long-term earnings growth rate of 15% compared with the industry’s 9.6% growth. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 9.3%.

Align Technology,carrying a Zacks Rank #2 at present, posted a fourth-quarter 2025 adjusted EPS of $3.29, exceeding the Zacks Consensus Estimate by 10.1%. Revenues of $1.05 billion outperformed the Zacks Consensus Estimate by 5.3%.

ALGN has an estimated long-term earnings growth rate of 10.1% compared with the industry’s 9.5% growth. The company’s earnings outpaced estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 6.16%.

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

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