Medtronic is the world’s leading medical technology and services company. The company’s mission is to contribute to healthy human living through the application of biomedical engineering. Medtronic researches, designs, manufactures and sells health instruments and appliances in over 160 countries around the world. The company was founded in 1949 by Earl Bakken and Palmer Hermundslie, and it serves its clients through four distinct business segments: Cardiac and Vascular Group, Restorative Therapies Group, Minimally Invasive Technologies Group and Diabetes Group.
The company initially started as a medical equipment repair shop in Minneapolis, Minnesota, US. But an opportunity soon arose for the young company to help design energy-efficient and implantable pacemakers. This partnership, with St Joseph’s Hospital research laboratory, would forever change the history of Medtronic. The implantable pacemaker became the company’s most important product even as Medtronic expanded into new territories and launched new product types.
The company accelerated its growth in the 1980s and 1990s as the medical technology industry was consolidating. It made numerous acquisitions and diversification to retain its space in the industry. In 2014, Medtronic performed the largest ever U.S. tax inversion, moving its legal headquarters to Dublin, Ireland. Minneapolis remained its executive and operational headquarters. Medtronic went public in 1977, listing on the NYSE, where it trades under the ticker symbol MDT. The stock falls in the Healthcare sector, under the Medical Devices industry.
Medtronic Stock History
Since going public, Medtronic has performed six 2-for-1 stock splits. All the stock splits happened between 1989 and 1999, a period in which the company experienced massive growth. Split adjusted, the MDT stock started a massive rally in the mid-1990s that saw the stock rise from below $10 to highs of above $60 by December 2000.
The stock then shifted to a multiyear sideways trend as the company consolidated its business, but it then tumbled to lows of circa $25 by March 2009 in response to the effects of 2008 global financial crisis. MDT recovered impressively and embarked on a long-term uptrend that saw it print an all-time high of above $122 in February 2020.
Medtronic is a true Wall Street Dividend Aristocrat. The company has paid dividends to shareholders for 43 consecutive years. Having a dividend-paying stock in your portfolio always helps in guaranteeing regular income even during market downturns.
How to Trade Medtronic Stock
Here are some of the most important factors to consider when trading Medtronic Stock:
- Legislative and Taxation Issues
Medtronic operates in a sensitive space that is susceptible to legislative scrutiny. The company has had to deal with legal pressures, such as the use of animals in its experiments. Additionally, it has to pass various regulatory checks by bodies, such as the FDA, before releasing any product in the market. Ever since it performed the Ireland tax inversion deal, Medtronic is always tracked aggressively by US tax authorities. The company is also present in numerous jurisdictions around the world, and changes in tax laws can impact its revenues and margins significantly.
- New Product Rollout
Medtronic came into relevance by innovating pacemakers in its early years. The company has secured longevity by constantly innovating and diversifying into new product lines. In recent years, Medtronic has managed to boost its revenues by rolling out new products especially in the diabetes care market. Going forward, the company can only guarantee growth if it is involved in extensive research and development of new products that will meet the needs of the ever-evolving healthcare industry. How the company responds to the use of apps-based, patient-centric healthcare solutions will contribute to its survival and growth in the industry.
Competition in the healthcare industry is stiff and fierce. Medtronic competes in various spaces with rivals such as Johnson & Johnson, St. Jude Medical Inc., Cardiac Pacemakers Inc., Pfizer, and Siemens. Furthermore, the stable profits realised in the healthcare industry constantly attracts new players which affect overall sales and profitability. New products or technologies launched by any existing or new player can put massive pressure on the revenues and margins of Medtronic and other companies, both in the medium and long term. Thus, it is always important to keep track of the competition when trading the MDT stock.
- Periodic Earnings Reports
Medtronic’s fiscal year runs from August to July. It is important to keep track of the company’s quarterly and annual earnings reports because they give a clear picture of its business health. When watching earnings releases, it is important to take into account the market and analysts’ expectations. If the released earnings beat analysts’ expectations, the MDT stock will likely drift higher; but if the report misses or does not comes out as expected, there may be downward pressure on the stock.
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Medtronic Stock FAQ
- Why should I trade Medtronic shares?
Stocks in the medical technology and services industries are notoriously volatile, and Medtronic is not only no exception, but it could be even more volatile than most. With that being the case, we can see no reason why any short-term trader wouldn’t want to watch this stock and jump in at any opportunity for profit. The stock has frequent large moves, and any style of trading has the potential to benefit from the price action of Medtronic. New product launches and acquisitions seem to be some of the best times to take advantage of Medtronic, so keeping an eye on the news cycle can also help.
- Is Medtronic the best medical technology stock for trading?
As a volatile stock within a volatile industry sector Medtronic is an excellent choice for traders who are able to profit from its constant up and down movement. And since the stock has also been trending higher for several years it has clearly defined patterns as well, which does make it one of the best stocks in this group for traders. With a clear upwards bias, it is a simple task to watch for share pullbacks and use those as entry points for trades. Remember that market conditions do change though, so this might not always be the case.
- What’s the best strategy for trading Medtronic shares?
Given the volatile and often choppy nature of Medtronic a good strategy to use would be one that looks for reversals. Traders could combine an oscillator to see overbought and oversold levels, with a moving average crossover system that will indicate when price is likely reversing direction. Moves can be rapid with this stock however, so traders really need to be aware of what the stock is doing on a regular basis, otherwise they could easily miss the best trading opportunities, or end up getting in too late on a trade.