Medtronic (NYSE:MDT), which is renowned for inventing the world’s first battery-operated implantable pacemaker, has over time earned respect as a worldwide leader in medical technology and has created substantial value for its shareholders. Although the company’s advancements have influenced contemporary healthcare, its stock presents a more cautious narrative today. Medtronic experienced a 50% decline in its stock from its 2021 peak of approximately $140 to below $70 in late 2023, partly attributed to the recall of its MiniMed 600 and 700 series insulin pumps over battery complications. While MDT stock has since regained some of those losses and currently boasts a market cap exceeding $100 billion, it still trades about 30% lower than that peak, prompting concerns regarding sustained investor faith.
In the past year, Medtronic reported nearly $33.2 billion in revenue and $4.3 billion in net income, indicating slight top-line growth and consistent profitability. However, operating cash flow has been relatively weak and erratic, with only $127 million recorded in the latest quarter — a sum representing less than 0.5% of revenue and suggesting tighter cash generation despite stable earnings.
What’s not to appreciate? Here’s the reality: in a downturn, MDT might still face significantly greater losses, and historical evidence supports this. In 2022, the stock declined nearly 49%, much more than the S&P 500. Therefore, could today’s $93 stock dip below $50 if macroeconomic conditions worsen? It’s a possibility. Of course, individual stocks tend to be more volatile compared to a diversified portfolio — and in this environment, if you desire potential gains with reduced volatility relative to a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns exceeding 91% since its inception.
Why is this particularly important now? While Medtronic continues to innovate within its healthcare segment, current economic challenges may hold greater significance. Indeed, inflation pressures have eased, but they haven’t vanished entirely. Moreover, growing uncertainty regarding global trade, interest rate strategies, and medical reimbursement trends could further strain healthcare profit margins. These risks heighten the likelihood of another downturn, or at least a more challenging environment for markets. When compounded with political and geopolitical uncertainties, it becomes clearer why a stock like Medtronic, despite its fundamental strengths, may find it difficult to reclaim its former highs.
Here are the specific data points concerning Medtronic that raise our concerns:
During the last two economic downturns, MDT stock lost significantly more value than the benchmark S&P 500 index (refer to the last six market crashes compared).
Inflation Shock (2022)
- MDT stock declined 48.6% from a peak of $135.17 on September 8, 2021, to $69.43 on October 27, 2023, compared to a peak-to-trough decline of 25.4% for the S&P 500.
- The stock has not yet returned to its pre-Crisis high.
- The highest value the stock has reached since then is $94.50 on March 9, 2025, and it currently trades at $92.94.
Covid Pandemic (2020)
- MDT stock declined 39.9% from a peak of $121.30 on February 6, 2020, to $72.92 on March 23, 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500.
- Nonetheless, the stock completely recovered to its pre-Crisis peak by April 9, 2021.
Wealth Protection
Here’s the primary concern: Medtronic is still priced at a trailing P/E of approximately 27, despite experiencing slowing growth. Its LTM revenue growth has consistently slowed, from over 5% eight quarters ago to under 3% in the most recent quarter. So ask yourself: if the stock decreases to $70 or $50, will you maintain your position? Or will you panic sell? Maintaining a position in a falling stock is never easy. Trefis collaborates with Empirical Asset Management — a Boston-based wealth management firm — whose asset allocation strategies produced positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has included the Trefis HQ Portfolio within this asset allocation framework to offer clients better returns with lower risk
compared to the benchmark index; this strategy is less of a roller-coaster experience, as evidenced by HQ Portfolio performance metrics.