Title: Friday POW! — Pick of the Week: Medtronic (MDT) Source: Haymaker (David Hay's Substack newsletter, PAID) Author: The Haymaker Team (David Hay) Date: 2026-JUN-12 (prices/data as of 6/10/26 per the post) URL: https://haymaker.substack.com/p/friday-pow-3b8 Type: Written newsletter (no video / no timestamps). Paid subscriber content saved for personal study. The post carries no issue number in its text (the previous POW was #275 on 2026-JUN-05). It ends with the full Haymaker portfolio as image tables — "Buys" and "Holds, Trims, Sells" with price / cost / % change / rating — transcribed at the end of this file and captured in david-hay/portfolio.json. Post images saved beside this file: pow-header.png (Pick of the Week cartoon art), mdt-ps-pe-10yr.png (10-yr P/S + P/E de-rating chart, Bloomberg), mdt-5yr-price.png (5-yr price chart with downtrend line + ~$70 support, Bloomberg), buys-1.png / buys-2.png / holds-trims-1.png / holds-trims-2.png (the portfolio tables). ================================================================ Key Highlights (data as of this writing on 6/10/26): - FY2026 revenue $36.4B up 8.4% reported, 5.8% organic — strongest in 10 years. Q4 revenue $9.8B up 9.9% reported, 6.6% organic — 90 basis points ahead of guidance - Cardiac Ablation Solutions up 78% globally, 124% US — gaining eight points of U.S. market share in a single quarter - Hugo robotic surgery expanding US indications; AiBLE spinal AI platform FDA-approved; Symplicity Spyral renal denervation scaling globally - FY2027 organic revenue growth guided 6.75-7.25%; adjusted EPS guidance $5.90-6.00 implying high single-digit growth - 2.76% dividend yield, 1.28B shares outstanding, $80.57 current price - 22 analysts recommend Buy/Hold, with zero Sells - Average analyst price target $98.52 — 22% upside to consensus. High target $120 — 49% upside - 52-week range $73.31-$106.33 — stock currently sits 24% below its 52-week high The Story In a Nutshell After not featuring very many healthcare names historically, we're now highlighting a name in this sector in back-to-back weeks. While the recommendation is primarily because we think the stock is attractive, it's also a recognition that healthcare as a whole looks undervalued and we're seeing a broad rotation into the space. With that, let's dive in… Medtronic has spent the better part of five years being one of the more frustrating stocks in the medical device sector. MDT is a $36 billion revenue company that somehow managed to grow slower than its peers, lose share in key markets, and drift from $120 to $74, all while Boston Scientific and Abbott quietly ate its lunch. The market came to a seemingly obvious conclusion: legacy MedTech giant, too big to move, too bureaucratic to innovate, with a nice dividend. In other words: growth investors should move on – nothing to see here. That gameplan was correct from 2021 to 2024, but it may be the wrong approach going forward. Fiscal year 2026 delivered $36.4 billion in revenue, up 8.4% reported and 5.8% organically, which was the strongest top-line performance in 10 years. This is the product of three years of portfolio rationalization, pipeline investment, and a fundamental business model reset that has been invisible to investors focused on the legacy narrative. BTIG, the big institutional broker, upgraded MDT to Buy from Neutral this week citing consistent organic growth. The most important thing about that upgrade might be that it's the beginning, not the end, of a re-rating cycle (upward, of course) that could have years to run. The specific reason the market is still slow to recognize what's happening is that Medtronic's growth is coming from exactly the places investors stopped watching years ago: cardiac ablation, surgical robotics, renal denervation, and AI-driven spinal surgery. Cardiac Ablation Solutions revenue increased 78% globally in Q4, including 124% U.S. growth, gaining an additional eight points of U.S. share. Hugo robotic-assisted surgery is filing for expanded U.S. indications in general surgery, with LigaSure RAS Maryland instrument 510(k) pending. The AiBLE spinal platform (integrating Mazor robotics, StealthStation navigation, O-arm imaging, and UNiD AI-driven surgical planning into a single workflow) received FDA approval for Stealth AXiS in February 2026. These are generational platform launches that the market is pricing as if Medtronic is still the company that missed every growth wave from 2019 to 2023. The old identity and the new identity are diverging rapidly, and at $80.57, you're paying for the old one. The Re-rating Setup MDT at $80.57 trades at 13.6x forward adjusted earnings on FY2027 guidance midpoint of $5.95. Boston Scientific trades at 28x, Abbott trades at 22x, and the sector average is 20x. The multiple gap would be justified if Medtronic were still growing at 2-3% organically and losing share in its most important markets, but it's not. The company just delivered 6.6% organic growth in Q4 and is guiding to 6.75%-7.25% for the next full year. The peer multiple gap is due to years of earned skepticism that has not yet shifted even though the business is visibly performing differently. We think it's likely that a reversal may be coming. In our view, the first stage, MDT re-rating from 13.6x to 17x on FY2027 EPS of $5.95, produces a ~$101 stock. That requires nothing more than the market applying a below-peer multiple to a company that is now growing in line with peers. Here are a few reasons why we think it gets there. The Growth Platforms Driving the Re-rating Four platforms are simultaneously inflecting, and we don't think the market is really pricing any of them correctly. Pulsed field ablation (PFA) is one of the most (possibly the single most) significant atrial fibrillation treatment advances in two decades. MDT's Affera PFA generated 78% global revenue growth in Q4 (124% in the U.S.) capturing eight share points in a single quarter, as its architecture continues to demonstrate compelling real-world outcomes. It's true, the U.S. commercial launch is still early. But, PFA's reduced procedure time and lower skill dependency unlocks community hospitals that traditional ablation never reached, expanding the addressable market well beyond the high-volume centers that have historically defined the AFib ablation space. Hugo robotic surgery procedure volumes, meanwhile, are growing 2-3x the overall market. The market prices it as a money-losing startup initiative. We think the more accurate take on Hugo is a platform at the inflection between investment and returns, precisely where Intuitive Surgical stood in 2005 before it built a $130 billion market cap. Medtronic's existing hospital relationships give Hugo a distribution advantage no pure-play startup can replicate, and when a new indication is approved, it sells into accounts that already trust Medtronic. The AiBLE smart ecosystem is a fully integrated suite of advanced technologies designed for spinal, cranial, and orthopedic surgeries. This platform integrates robotics, navigation, imaging, and AI surgical planning into a single workflow. Stealth AXiS cleared FDA in February 2026. The installed base generates recurring revenue from every procedure, and each new indication multiplies procedures per unit. This is physical AI in its most commercially mature form, removing the skill dependency from complex spinal surgery and producing extremely consistent outcomes across every hospital that deploys it. Symplicity Spyral, an FDA-approved medical device that uses renal denervation, is annualizing at $100 million in revenue with procedure volumes more than doubling since Medicare reimbursement was approved. The market it addresses is staggering, as 1.28 billion people globally have hypertension, and a meaningful slice of them can't get it under control no matter how many pills they take. Symplicity offers something those patients have never had: a single outpatient procedure that delivers durable blood pressure reduction without asking them to remember a medication regimen for the rest of their lives. Valuation The following chart gives you a strong sense of the de-rating MDT's stock price has endured over the last five years. From a hefty 25 times earnings, its P/E has melted all the way down to 13.6, as stated earlier. Most utilities sell for a higher multiple of earnings. Yet you can't blame the investment community. Earnings and sales growth have essentially flatlined over the last five years and, actually, for a decade. It's not hyperbolic to say that its operations need a jolt from one of its defibrillators (a device, by the way, of which it is the world's leading manufacturer). [IMAGE: 10-Year Chart of Price/Sales And P/E ratios for MDT — Bloomberg — saved as mdt-ps-pe-10yr.png] However, there are rays of sunlight breaking through the clouds, as described above. FY2027 adjusted EPS guidance midpoint is $5.95. If achieved, that would be a new high in profitability, though the increase won't yet set investors' hearts racing. But even in this slower growth mode, MDT has been able to hit an upper-teens multiple, as you can see above. With the top-line speed up now occurring, assuming it can be sustained, that should be eminently achievable, possibly surmountable. Using a target of 17 times earnings, a below-peer multiple for a company now growing 6-7% organically, the stock could be worth $101, a 25% gain from today's price. At 20x, approaching the multiple that peers Abbott and Boston Scientific command: $119. At 22x, if the pure MedTech portfolio earns a growth premium: $131. In our view, the base case over the next 12 months is the move from 13.6x to 17x as two or three consecutive earnings prints in FY2027 show that the FY2026 growth rate was not a one-year fluke. That produces a $103 stock with a 3.57% dividend yield providing return while you wait. The three-year bull case as Hugo scales commercially and Affera cements cardiovascular platform leadership is $130 to $145, a 60% to 80% total return from current levels. The bear case at 13x would be tariffs bite harder than guided and the cardiovascular growth rate mean-reverts, at $77, roughly flat to current levels before the dividend. In other words, the risk/reward is highly attractive, particularly with hard evidence growth is re-accelerating. Technicals Reflecting its early stage turnaround status, its stock price chart is underwhelming. However, there are a couple of positives. First, the downtrend that began in 2021 appears to have ended (note the diagonal red line). It could be argued that occurred as far back as 2023 but, since then, the share price has been bouncing from 70 to 100. Obviously, it's closer to the low end of that band. The other positive is that it's been holding support around $70 for several years. In other words, the stock has put in a solid base. With fundamentals apparently improving in a meaningful way, this could serve as a launch pad for a move from deep value status back to at least the S&P's average current P/E of 21. [IMAGE: Five-Year Price Chart of MDT (with prior downtrend line and support level displayed) — Bloomberg — saved as mdt-5yr-price.png] Arguing the Other Side Medtronic's growth has clearly re-accelerated, but Boston Scientific remains the benchmark investors care about and is still growing materially faster in many of the same markets. If that gap persists, MDT may deserve a higher multiple than it has today, but not necessarily the peer-level valuation bulls are expecting. Goldman Sachs maintained Neutral with an $83 target, slightly above current levels, specifically citing concerns about whether current growth rates are durable or front-loaded from new product launches that normalize as comps get tougher. The Affera 78% growth rate is an exceptional launch metric, but the question is where it settles once initial wave adoption is complete and Medtronic is competing for share at the margin rather than capturing first-time ablation adopters. Hugo remains a money-losing investment with an uncertain timeline to profitability. Intuitive Surgical's da Vinci installed base advantage, clinical evidence advantage, and ecosystem advantage are substantial. The bullish case on Hugo requires sustained execution over multiple years in a segment where Intuitive is actively defending its position and J&J is also competing aggressively. The Bottom Line Our usual question: So, what are we buying here? Medtronic at $80.57 is a company that just delivered its strongest revenue growth in a decade, has four distinct billion-dollar growth platforms simultaneously inflecting, and trades at 13.6x forward earnings against peers at 22-28x. The market's mental model is the 2021 version of Medtronic, which was a slow-growth conglomerate, with an above-market dividend. The actual business today is a company in the middle of one of the most significant product-cycle accelerations in its history. The cardiac ablation platform alone saw 78% growth with eight points of market share capture in a single quarter, and we think deserves a complete re-evaluation of what MDT is becoming. The 12-month price target is $103 on a probability-weighted basis, or 28% upside from $80.57. The three-year bull case as the platform re-rating reaches peer multiples is $130 to $145, which would be a 60%-80% return. The bear case is essentially flat from current levels but, including the dividend yield, even that assumption provides return while you wait. Call us overly conservative, but we're attracted to situations where downside is limited and the upside could be surprisingly lucrative. We recommend a buy for Medtronic (MDT). The Haymaker Team (Standard Haymaker disclosures follow — David Hay passive owner of Evergreen Gavekal, not investment advice, etc.) ---------------------------------------------------------------- Portfolio (image tables at the end of the post; one row per lot). Transcribed from buys-1.png / buys-2.png and holds-trims-1.png / holds-trims-2.png: Buys (Ticker / Price / Cost / % Change / Rating): AAP $60.86 $58.78 3.54% B; ACN $171.04 $178.31 -4.08% SB; AIG $75.45 $69.82 8.06% B; ANGPY $12.25 $8.27 48.13% SB; APA $37.07 $29.91 23.94% B; BA $221.27 $209.89 5.42% SB; BABA $111.99 $162.11 -30.92% SB; BOLSY $8.95 $9.85 -9.14% B; CPNG $16.92 $20.16 -16.07% SB; DECK $114.55 $104.58 9.53% B; DGX $203.74 $200.29 1.72% B; EL $89.66 $86.82 3.27% B; EQT $51.78 $64.96 -20.29% SB; EQT $51.78 $57.00 -9.16% B (04/20/26 Buy); EXE $88.91 $77.49 14.74% B; FANG $192.81 $160.87 19.85% B; FXI $35.26 $30.30 16.37% SB; GOLD $44.07 $21.60 104.03% SB; GOLD $44.07 $47.01 -6.25% (04/24/26 Strong Buy); HBRIY $3.66 $4.09 -10.51% SB; IJH $76.09 $62.30 22.13% B; J $128.10 $128.30 -0.16% SB; KWEB $26.53 $32.24 -17.71% SB; LNC $37.24 $40.25 -7.48% SB; MDT $80.30 (no cost yet) #VALUE! SB; MTB $230.45 $187.34 23.01% B; NFG $77.32 $91.03 -15.06% SB; NHPEF $4.20 $3.74 12.30% SB; NTR $67.54 $47.89 41.03% SB; NTR $67.54 $76.05 -11.19% SB (03/19/26 Buy); PALL $23.23 $18.06 28.63% B; PEP $143.33 $157.06 -8.74% SB; QNST $12.42 $11.25 10.40% SB; RRC $38.51 $35.56 8.30% SB; RYAAY $60.27 $50.11 20.28% B; RYAAY $60.27 $53.36 12.95% B (05/15/26 Buy); SRUUF $18.62 $14.50 28.41% SB; SRUUF $18.62 $18.55 0.38% SB (11/12/25 Buy); UBER $68.13 $84.67 -19.53% SB; WDOFF $18.32 $9.36 95.73% B; WMMVY $30.19 $32.08 -5.89% B; XLE $57.58 $48.38 19.02% B; YACAF $4.74 $5.20 -8.85% B Holds, Trims, Sells (Ticker / Price / Cost / % Change / Rating): AA $68.85 $36.79 87.14% H/T; AEM $164.52 $82.93 98.38% H; AESI $16.97 $8.84 91.97% H; AG $17.68 $8.27 113.78% H; AGI $35.51 $18.73 89.59% H; AR $34.61 $27.88 24.14% H; BTU $27.59 $14.50 90.28% H; CB $324.59 $249.26 30.22% H; CDE $17.31 $10.00 73.10% H; CHKP $125.39 $151.87 -17.44% H; CKHUY $8.85 $6.74 31.31% H; CLF $13.72 $12.12 13.20% H; COPX $86.32 $46.67 84.96% H; CRH $106.46 $73.23 45.38% H; CSCO $121.46 $53.50 127.03% H/T; CVE $28.22 $15.54 81.60% H; DAL $83.19 $50.44 64.93% H; EEM $68.01 $46.12 47.46% H/T; EQNR $36.27 $22.59 60.56% H; EWJ $92.75 $68.20 36.00% H; EWS $29.51 $18.21 62.05% H; EWZ $35.05 $28.21 24.25% H; FNV $211.88 $125.82 68.40% H; FSLR $269.19 $133.03 102.35% H; GDX $80.47 $49.34 63.09% H; GDXJ $105.07 $60.43 73.87% H; GOOG $360.00 $168.68 113.42% T; HBM $27.86 $10.46 166.35% H; HCC $98.24 $53.23 84.56% T; HP $39.38 $37.92 3.85% H; IBKR $90.94 $21.70 319.08% T; IBM $272.93 $188.00 45.18% S; IJS $135.78 $86.27 57.39% H; JPM $319.45 $175.65 81.87% H; LMT $542.97 $463.87 17.05% H; MO $71.67 $49.71 44.18% H; NE $46.79 $31.83 47.00% H; NEM $100.48 $42.21 138.05% H; NHYDY $11.63 $7.36 58.02% H/T; NOW $101.68 $102.00 -0.31% H/T; PALAF $7.00 $4.93 41.99% T; PARR $55.48 $16.18 242.89% T; PBR $18.12 $11.85 52.91% H/T; PSLV $21.64 $9.82 120.37% H; RIG $6.03 $3.74 61.23% H; RTX $184.34 $113.95 61.77% T; SBSW $9.87 $4.76 107.35% H; SHEL $85.73 $70.97 20.80% H; SLB $56.36 $36.60 53.99% H; STT $166.95 $112.95 47.81% H; TMUS $189.17 $164.27 15.16% H; URNJ $24.64 $18.22 35.24% H; USO $126.09 $67.19 87.66% H; VAL $89.71 $47.72 87.99% H/T; XAR $281.43 $220.00 27.92% H Changes vs the 2026-JUN-05 POW (#275) tables: - MDT added to Buys (this week's pick) — rated SB, no cost basis yet (#VALUE! in the % column). - DGX (last week's pick) now an actual Buy-list lot: cost $200.29, rated B. - FANG (Diamondback) moved from Trims/Holds (H) to the Buys list (B), same $160.87 cost basis. - NOW de-duplicated as promised — now only on Holds/Trims/Sells, rated H/T. - USO de-duplicated — its Buy-list lot is gone; remains on Holds (H). - IBM downgraded H -> S (Sell) — the third list is now titled "Holds, Trims, Sells". - AESI shows H (was H/T); NHYDY shows H/T (was H).