Should You Buy Medtronic Stock as Its Hugo Surgical Robot Gains Ground?

Shares of Medtronic (NYSE: MDT) are down more than 3% this year, presenting a compelling opportunity for savvy, growth-oriented investors.

The healthcare company, known for its medical devices, is seeing significant gains in its Hugo robotic-assisted surgery (RAS) system. Just five years after the first Hugo procedure, the Hugo is eroding the edge that industry leader Intuitive Surgical (NASDAQ: ISRG) has long held.

Medtronic got approval from the Food and Drug Administration (FDA) to use the Hugo in urological procedures last December and in June submitted several new regulatory filings to the FDA to broaden Hugo's use in general and gynecological surgeries.

The stock has struggled this year as the company has spent heavily on research and development and acquisitions and is investing in the planned spinoff of its diabetes business. Despite those concerns, here are three reasons the stock is a buy.

Image source: Getty Images.

1. The flexibility and lower cost of the Hugo

Medtronic is actively eroding Intuitive Surgical's historic monopoly in soft-tissue RAS. Unlike rigid, single-cart legacy systems, Hugo's modular arm design allows individual arm carts to be easily moved, shared, and scaled across different operating rooms. This lowers the barrier to entry for regional hospitals.

Hugo natively integrates with Medtronic's Touch Surgery enterprise platform, using artificial intelligence (AI)-powered surgical video analytics and real-time intraoperative guidance, aided by Nvidia infrastructure, creating long-term software and recurring instrument pull-through revenue.

In the first quarter of fiscal 2027, the company reported revenue of $9.8 billion, up 13.7% year over year, and earnings per share (EPS) of $1.14, up 40.7% over the same period last year. The company has four segments: cardiovascular, medical-surgical, neuroscience, and diabetes, with cardiovascular leading the way at $3.9 billion in sales, up 18.9% year over year.

The report was strong enough that the company raised full-year guidance. It now says it expects organic revenue to grow between 7.25% and 7.75%, up from 6.75% to 7.25%. It also upped its non-GAAP (generally accepted accounting principles) EPS prediction to be between $5.94 and $6, compared to the prior estimate of $5.90 to $6.

2. It is on the cusp of being a Dividend King

Dividend Kings are stocks whose dividends have increased for 50 or more consecutive years. In June, Medtronic raised its dividend by 1.4% to $0.72 per quarterly share, the 49th consecutive year it has increased its dividend. The yield is 3.06% at its current share price, nearly three times the average S&P 500 dividend yield.

Medtronic's dividend is backed by a healthy cash flow payout ratio of around 59%, providing income-focused investors with a reliable buffer against broader macroeconomic volatility.

3. Its pipeline has catalysts beyond robotics

Medtronic is expanding its footprint in cardiac pulsed field ablation (PFA) with platforms such as Affera, targeting atrial fibrillation with faster, safer procedure times.

It is also deepening its moat by pairing spinal implants with surgical navigation, imaging, and AI preoperative planning tools. The company's AiBLE Smart Ecosystem uses 2D/3D full-body imaging and predictive AI, so surgeons can simulate long-term outcomes and design patient-specific implant constructs.

Medtronic stock is priced to buy right now

Medtronic showed double-digit growth in the first quarter, and at its current price, it is a bargain compared to other medical equipment competitors. It is trading at about 22 times trailing earnings and just above 15 times forward earnings, less than nearly all of its competitors.

It also has a higher dividend yield than its competitors, allowing investors to be patient as the company's expansion plans come to fruition.

James Halley has positions in Nvidia. The Motley Fool has positions in and recommends Intuitive Surgical, Medtronic, and Nvidia. The Motley Fool recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.