Jim Cramer called Medtronic plc (NYSE:MDT) a “quandary” on the September 8 episode of Mad Money, as he said:
At the same time, there’s some tremendous healthcare companies in bull market mode… Here’s one that’s a quandary, Medtronic. Medtronic, the medical device company, shocked us with a big upside surprise and a major increase in organic growth. It’s separating its worrisome diabetes division by the end of the year. I don’t want to be in a diabetes division in a world where GLP-1s are ascendant. The stock is now where it was when it reported. Yet, it is a vastly improved year-over-year business. To me, that is just crazy.
Medtronic Posts Strong Q1 Growth and Higher Guidance
Medtronic plc (NYSE:MDT) reported fiscal first-quarter 2027 revenue of nearly $9.8 billion, up 13.7% organically, while non-GAAP diluted EPS rose 15.1% to $1.45. The company raised its full-year organic revenue-growth forecast to 7.25%-7.75% from 6.75%-7.25% and increased the lower end of its non-GAAP diluted EPS guidance to $5.94 from $5.90. Moreover, cardiovascular revenue increased 18.9% organically to $3.927 billion, with Cardiac Ablation Solutions up 88%. Neuroscience grew 9.3%, while Medical Surgical increased 10.2%.
The first quarter included an extra fiscal week that the company estimates benefited organic growth by approximately $570 million. It also committed $700 million to Cornerstone Robotics for distribution rights to its Sentire surgical system in select markets outside the United States andagreed to invest up to $80 million in Pi-Cardia, with an option to acquire the company for up to $210 million.
Medtronic Faces Margin and Diabetes Separation Risks
It is important to note that Medtronic plc’s (NYSE:MDT) 13.7% organic revenue growth in the first quarter included approximately $570 million from an extra fiscal week, providing a significant one-time contribution to the quarter’s reported growth rate. At the same time, non-GAAP operating margin increased only 10 basis points to 23.7%. The company also faces competition in robotic surgery as it expands Hugo and adds the Sentire system through its Cornerstone Robotics investment. Intuitive Surgical remains the established leader in the market, which gives Medtronic a competitive challenge as it expands its surgical robotics business.
Medtronic Hedge Fund Ownership Rises as Short Interest Stays Low
According to Insider Monkey, which tracks more than 1,000 hedge funds, 67 hedge funds held Medtronic in Q2, compared with 60 in Q1. After increasing its position by 38% in the quarter, First Eagle Investment Management was the biggest hedge fund shareholder with nearly 13.8 million shares, as per Insider Monkey. Recent short-interest figures from multiple sources cluster at approximately 1.1%-1.12% of float.
Medtronic plc (NYSE:MDT) enters the remainder of fiscal 2027 with higher revenue and EPS guidance and strong cardiovascular growth. The company also has an extra-week benefit in its first-quarter growth comparison, 10 basis points of operating-margin expansion and the MiniMed separation underway.
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