Medtronic Stock Declines 5.6% in a Month: Time to Buy the Dip?

Medtronic MDT closed at $79.99 in the last trading session, reflecting a 0.05% drop from the previous day. Broadly speaking, 2024 has not been smooth for investors in the Medical Products industry. Rising geopolitical pressure, primarily disruptions around the Red Sea, has increased freight costs and shipping lead times, spelling trouble for MDT and several of its direct competitors, like Abbott ABT and Boston Scientific BSX, thus putting pressure on their margins.Over the past 30 days, shares of Medtronic have lost 5.6%, underperforming the industry’s 5% decline and the S&P 500’s 0.7% drop. Boston Scientific and Abbott registered 3.1% and 4.1% declines, respectively, over the past 30 days on favorable industry forecasts. Medtronic has not recorded any gains due to several company-specific factors.One-Month Price PerformanceImage Source: Zacks Investment ResearchTwo Prime Factors Behind MDT's Southbound SharesFed Signals Fewer 2025 Rate Cuts: There was an improvement in investors’ sentiment over the past couple of months, with IMF’s October world economic outlook boasting about the global inflation rate declining steadily, from 6.8% in 2023 to 5.8% in 2024 and 4.3% in 2025. While this has, to some extent, led to a boost in the stock prices of several MedTech players, the Fed’s conservative approach toward the 2025 rate cut has again led to an overall decline in market sentiment. On Dec 18, while announcing the third rate cut of 2024 in a row, the Fed also signaled 2025 cuts on apprehension of the expectation inflation to be higher in 2025.Growing Sino-U.S. Trade Complications to Mar Growth: The 2024 National Trade Estimate report depicted severe concern around growing Sino-U.S. trade complications and outlined the overwhelming impact of Chinese volume-based procurement and the Made in China 2025 industrial plan on U.S. medical device businesses. Medtronic, which records approximately 7% of its operational revenues from China (as of fiscal 2024), might face a compromised trade situation in the ongoing fiscal if the trade tension between these two countries does not get resolved any time soon.MDT Stock Below Moving AveragesMDT is currently trading below its 50-day and 200-day moving averages, indicating the possibility of a further bearish shift in the stock's price.50 & 200-Day SMAsImage Source: Zacks Investment ResearchLong-Term Prospects BrightAlthough Medtronic has been suffering from several industry-wide challenges in recent times, considering the stock’s strong fundamentals and agile moves toward executing its business strategies, we strongly believe these downsides are short-lived.Medtronic is strategically expanding its global presence to address the unmet demand for advanced medical devices. Within Cardiovascular, Medtronic is gaining market share, banking on product launches in Cardiac Rhythm Management (CRM) and Structural Heart. CRM, one of Medtronic’s largest businesses, continued to build on the company’s category leadership, banking on the strong performances of Defibrillation Solutions and cardiac pacing therapies. Within Structural Heart, the company looks forward to market share gain on strong Transcatheter aortic valve replacement prospects.Hypertension has brought up multibillion-dollar opportunities for MDT. Within this business, CMS recently finalized the inpatient payment and, in November 2024, finalized the outpatient transitional pass-through payment for the Symplicity Spyral renal denervation (RDN) catheter used in the Symplicity blood pressure procedure under the Medicare Hospital Outpatient Prospective Payment System.In MedSurg, Medtronic is scaling the production of Hugo RAS. The Surgical and Neuroscience portfolios continue to contribute positively. Further, the company’s Pacing business continued to drive strong growth, banking on strong global growth of its Micra leadless pacemaker. Innovations and market expansion efforts are helping it offset the impact of inflation and supply disruptions.In terms of dividends, too, even after considering the company’s slowing rate of dividend hike, the current yield of 3.5% outperforms the industry and the sector average. The company’s current payout ratio stands at 53% compared with 36.5% for the industry.For investor’s note, Abbott’s dividend yield TTM is just 1.97%. BSX does not pay any dividends.Cheap ValuationMDT stock is currently trading at a discount compared to the Medical Products industry. Its forward 12-month P/E of 14.0X is lower than the industry’s 20.34X at this moment.Image Source: Zacks Investment ResearchShould You Invest in Medtronic Right Now?Despite the company’s several long-term upsides and dividend pay-out trend outperforming the industry standard, the ongoing short-term hiccups are limiting this Zacks Rank #3 (Hold) stock’s near-term gains. While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains, providing a better entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abbott Laboratories (ABT): Free Stock Analysis Report Boston Scientific Corporation (BSX): Free Stock Analysis Report Medtronic PLC (MDT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks