Wolfe upgrades Medtronic as pulsed field ablation may jolt near term growth

Investing.com -- Wolfe Research upgraded Medtronic plc to Peer Perform from Underperform saying that an expected ramp‑up of its Affera pulsed‑field ablation (PFA) system could add up to two percentage points to organic revenue and help the medical‑device maker exceed its own 5% growth target in fiscal 2026.

Affera’s contribution means “everything else” would need to grow only about 3‑4% to meet guidance, a level the rest of the portfolio has delivered over the past two quarters, according to analyst.

Medtronic (NYSE:MDT) shares are up 1% at $86.9 on Monday, have fallen about 5% since Wolfe first put an Underperform rating on the stock three years ago, lagging the S&P 500 Health Care index by roughly 37 points over that period.

The brokerage still sees structural risks, including surgical‑robot competition from Intuitive Surgical (NASDAQ:ISRG) and share losses in diabetes devices. It also warned that Medtronic’s valuation – about 15 times projected 2026 earnings, versus 11 times for other slow‑growth med‑tech peers, could compress if execution slips.

Wolfe’s upgrade is not a call that “the stock is fixed forever,” the note said, but reflects a more favourable skew to near‑term estimates thanks to Affera and “a decent‑sized list of lesser good guys” that could give the company a pulse after years of underperformance.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.Should you invest $2,000 in ISRG right now?

With ISRG making headlines, savvy investors are asking: Is it truly valued fairly? In a market full of overpriced darlings, identifying true value can be challenging. InvestingPro's advanced AI algorithms have analyzed ISRG alongside thousands of other stocks to uncover hidden gems. These undervalued stocks, potentially including ISRG, could offer substantial returns as the market corrects. In 2024 alone, our AI identified several undervalued stocks that later surged by 30 or more. Is ISRG poised for similar growth? Don't miss the opportunity to find out.

Reveal Undervalued Stocks Now