Why Medtronic Stock Is Sinking Today

Shares of Medtronic (MDT -6.64%) were sinking 7.3% as of 11:21 a.m. ET on Tuesday. The decline came after the medical device company announced its fiscal 2025 third-quarter results before the market opened.

Medtronic reported third-quarter revenue of $8.3 billion, up 2.5% year over year. This result came in slightly below the consensus Wall Street estimate of $8.33 billion. Diluted earnings per share (EPS) were $1.01 based on generally accepted accounting principles (GAAP). Its adjusted EPS was $1.39, up 7% year over year and higher than the average analysts’ estimate of $1.35.

How worrisome is Medtronic’s revenue miss?

Investors clearly focused more on the lower-than-expected revenue than the better-than-expected earnings. But just how worrisome is the company’s revenue miss?

I don’t think it’s worrisome at all. CEO Geoff Martha explained in the earnings call that surgical revenue was hurt by “a change in U.S. distributor buying patterns.” However, Martha said this disruption is expected to be resolved soon.

Importantly, Medtronic continues to project organic revenue growth in fiscal 2025 of between 4.75% and 5%. It also expects adjusted EPS in the current fiscal year of $5.44 to $5.50. The midpoint of this range is above the consensus Wall Street EPS estimate of $5.45.

Is Medtronic stock a buy on the dip?

Investors seeking strong growth probably won’t find the company appealing even with its shares down following the third-quarter update. However, the stock could be attractive to income investors. Its forward dividend yield is 3.24%.

Medtronic also isn’t far away from potentially joining the elite group known as Dividend Kings with its track record of 47 consecutive years of dividend increases.